Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

MESSAGES FROM THE QUEEN

MINISTERS OF THE CROWN (TRANSFER OF FUNCTIONS)

The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:

I have received your Address praying that the Transfer of Functions (Ministry of Pensions) Order, 1953, be made in the form of the Draft laid before Parliament.

I will comply with your request.

DOUBLE TAXATION RELIEF

The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:

I have received your Address praying that, on the ratification by the Belgian Government of the Convention set out in the Schedule to the Draft Double Taxation Relief (Taxes on Income) (Belgium) Order, 1953, a copy of which was presented on 14th May, an Order may be made in the form of the Draft laid before Parliament.

I will comply with your request.

Oral Answers to Questions — MINISTRY OF DEFENCE

Deserters (Coronation Amnesty)

Lieut.-Colonel Lipton: asked the Parliamentary Secretary to the Ministry of Defence to make a comprehensive statement on the results, to date, of the Coronation amnesty for deserters.

The Parliamentary Secretary to the Ministry of Defence (Mr. Nigel Birch): Up to 30th June 2,625 applications for the amnesty had been received and 2,407 protection certificates had been issued.

The latter figure includes 520 men who were given the benefit of the amnesty, in accordance with the concession announced by my right hon. and learned Friend the Home Secretary on 1st April.

Lieut.-Colonel Lipton: In view of the fact that the proportion of those who have applied is rather disappointingly small, will the Parliamentary Secretary make it clear that the amnesty offer is still open, that there is no date by which they have got to apply otherwise the amnesty offer comes to an end? Will he also say whether consideration has been given by the Government to extending the amnesty backwards to those who may have deserted before September, 1939?

Mr. Birch: It is true that the amnesty as announced is still open. It is very difficult to say how many there are eligible because nobody, in the nature of the case, knows how many there are in this country. There can be no question of extending the amnesty.

Deceased Soldiers (U.K. Interment)

Mr. Hale: asked the Parliamentary Secretary to the Ministry of Defence what payments have been made to any defence authority in respect of the transport home of the bodies of deceased military, naval or Air Force personnel by the relatives of the deceased during any recent period of 12 months.

Mr. Birch: Transport charges amounting to £170 have been received by the War Office and Air Ministry in respect of 34 payments by relatives during the past 12 months for the repatriation of bodies of Service men who died in the British Zone of Germany.

Mr. Hale: Is the Parliamentary Secretary aware that in two cases in the Oldham area in the last week demands have been made for the payment of the sum of £100 in each case, and that in each case the money has had to be borrowed by the relatives, and that, therefore, subscriptions are being asked to refund the money to the Ministry?

Mr. Birch: Of course I am aware of that. The figure I gave in answer to the hon. Gentleman's Question was how much the Service Departments had received, and the only amounts they have received are certain transport charges within the British Zone of Germany


which are reimbursable. Other costs are payable to the agency which carries out the transport.

Mr. Hale: asked the Parliamentary Secretary to the Ministry of Defence in what circumstances, and under what code of rules or regulations, arrangements are made for the transportation home, at the public expense, of the bodies of defence personnel killed on service in Western Europe.

Mr. Birch: The practice in all three Services is as stated by my right hon. Friend the Secretary of State for War yesterday.

Mr. Hale: Yes, that is a bad practice. Would the hon. Gentleman tell the House why it is that, having taken these men, and being under an obligation to return them and to bring them back free of cost when they are alive, the Department refuses now to bring them back free of cost when they lose their life on service?

Mr. Birch: This, as the hon. Gentleman knows, has been the practice always in the Services, and I really have nothing to add to the explanations my right hon. Friend gave yesterday, or, indeed, to those the right hon. Gentleman the Member for Easington (Mr. Shinwell) made when he was Secretary of State for War.

Mr. Shinwell: Yes, but while that is true, is the hon. Gentleman not aware that efforts were made when we were in office to persuade the agency responsible for transport to reduce their charges? What has resulted from those efforts?

Mr. Birch: That is a matter to which my right hon. Friend referred yesterday I understand that considerable success has been obtained in reducing charges.

Defence Expenditure

Mr. Emrys Hughes: asked the Parliamentary Secretary to the Ministry of Defence what new instructions he has given to the Army, Navy and Royal Air Force which will reduce the national expenditure on these Services.

Mr. Birch: None, Sir. It is my noble Friend's constant endeavour to limit expenditure on defence to the minimum compatible with the needs of the situation.

Mr. Hughes: Is the Minister aware that the United States of America are making drastic cuts in military, air and naval programmes, and that in the papers on Monday President Eisenhower made a statement a headline on which was, "President backs cuts in Air Force budget"? When is the hon. Gentleman going to follow the example of President Eisenhower?

Mr. Birch: I think it would be premature to draw any conclusion as yet from the events to which the hon. Gentleman has referred.

Mr. Simmons: Is the Government considering the possibility of securing efficiency and economy by a Transfer of Functions Order providing for one Ministry of Defence and three Parliamentary Secretaries?

Mr. Birch: I will bear the hon. Gentleman's suggestion in mind.

Korea (Expenditure and Casualties)

Mr. Emrys Hughes: asked the Parliamentary Secretary to the Ministry of Defence the total British expenditure that has been incurred on Korea up to the end of May; and what is his estimate of the total number of casualties to British forces.

Mr. Birch: The additional expenditure, including an allowance for exceptional consumption of military stores, incurred by the United Kingdom up to 30th June, 1953, was, at a very broad estimate, about £50 million. United Kingdom casualties up to the end of May, 1953, were 4,222 officers and men, of whom 702 were killed or died of wounds.

Mr. Hughes: Can the Minister tell us if British Forces are still in the battle line? Has he seen the statement made on Monday by the lieut.-general commanding the 8th Army, that he was confident he would be able to move United Nations troops out of the battle line should the South Koreans decide to fight on alone, and when is this Government going to support that line of argument?

Mr. Birch: I do not think that has anything to do with the Question.

Harvest Leave

Major Anstruther-Gray: asked the Parliamentary Secretary to the Ministry of Defence whether his Department will


issue an overall instruction that members of the Forces who can be spared from their duties to assist with the harvest may be granted facilities to do so.

Mr. Birch: No, Sir. Commanding officers in all three Services already have authority and are encouraged to allow such of their men as can be spared to help farmers with the harvest.

Major Anstruther-Gray: Can my hon. Friend give us any idea of the extent to which this authority is being taken advantage of in order to help the harvest wherever possible?

Mr. Birch: I understand that arrangements have been satisfactory in the past, but we have not yet got to the main part of the harvest.

Imperial Defence College (Ministers' Visits)

Major Anstruther-Gray: asked the Parliamentary Secretary to the Ministry of Defence how many members of the Government visited the Imperial Defence College during the last 12 months for the purpose of lecturing on the work of their Departments.

Mr. Birch: Eight, Sir.

Major Anstruther-Gray: In thanking my hon. Friend for that reply, may I ask him to bear in mind that the Ministers themselves will find these visits very instructive, and will he encourage them wherever possible?

Mr. Birch: I hope the instruction is mutual.

Mr. Hale: If the Ministers for the Co-ordination of something or other are numbered among the eight, could we have copies of their addresses, because we all want to know what they do?

Mr. Birch: Lectures given to I.D.C. are confidential.

Oral Answers to Questions — KENYA

Development

Mr. Hector Hughes: asked the Secretary of State for the Colonies if he will now specify the schemes he has prepared to remove the fundamental causes of social and economic discontent in Kenya; and how and when they will be put into operation.

The Secretary of State for the Colonies (Mr. Oliver Lyttelton): The preparation of schemes is a matter for the Kenya Government. Any major project must await the completion of their study of the wide range of complex problems mentioned in my statement of 29th April. Meanwhile the Kenya Government continues to execute its 10-year plan, and its estimated expenditure on development during the current year has now risen to £7½ million.

Mr. Hughes: Does the Minister remember that some time ago he said that he had in mind certain schemes, and does he agree that in addition to using force he should attempt to destroy the destructive doctrines of Mau Mau by inculcating good citizenship and civilisation? What is he doing along those lines?

Mr. Lyttelton: The hon. and learned Gentleman has a very hazy idea of my functions. These schemes are the job of the Kenya Government. There are a number of them in advanced preparation, and if the hon. and learned Gentleman exercises a little patience he will find the answers in fact to his Questions.

Political and Social Aspirations

Mr. Hector Hughes: asked the Secretary of State for the Colonies what organisation is now left in existence in Kenya, since the proscription of the Kenya African Union, which will enable Africans in Kenya, collectively and authoritatively, to define, express and present to the Government, in a legitimate way, their political, economic and social aspirations.

Mr. Lyttelton: African opinion may be expressed to Government through the African members of the Legislative Council and members of the Emergency Council, local associations, African District Councils, trade unions and the African Civil Service Association. There are thus many means by which the aspirations to which the hon. and learned Member refers can be expressed collectively in a constitutional manner.

Mr. Hughes: Is the Minister aware that that answer is couched in very general terms? Will he specify some of the organisations which are open to loyal Africans to enable them to co-operate in pursuing peace?

Mr. Lyttelton: I must contradict the hon. and learned Gentleman. The answer is in most specific terms and enumerates a number of bodies.

Mr. Hughes: But no names are given.

Mr. Baldwin: Is my right hon. Friend aware that if the Kenya African Union had been proscribed some three or four years ago when its activities were first reported to the Opposition, Kenya might not be in the state it is today?

Mr. Speaker: That is a very hypothetical question.

Tribeswoman (Treatment)

Mrs. Castle: asked the Secretary of State for the Colonies whether he is now in a position to make a report on the case of Njeri, wife of Mbiyu Gitau, Kiambaa.

Mr. Lyttelton: The wife of Mbiyu Gitau was admitted to the Kiambu Hospital on 27th December, 1952, and discharged on the 31st. I am informed that she made no report to a district officer or police officer at the time, and it has been difficult to trace her since. The District Commissioner, Kiambu, has been instructed to obtain a formal complaint from her which will then be investigated.

Mrs. Castle: While thanking the right hon. Gentleman for that reply, can I ask him whether he will make a report to the House when he has got full information on this matter?

Mr. Lyttelton: I think I gave the hon. Lady a promise that when these investigations were complete I would inform her so that I could answer a Question on the Paper.

Tribesman's Death

Mr. Hastings: asked the Secretary of State for the Colonies why no charges were made for nearly five months in connection with the death of Elijah Njeru Gideon who died on 29th January last, as the result of beating; and what charges have been made in connection with the two similar cases.

Mr. Lyttelton: Delay was due mainly to the difficulty of investigating this case under emergency conditions and to the fact that one African military witness

had returned to his home in the West Nile district of Uganda. I am awaiting a report from the Governor on the two cases I mentioned in my reply to the hon. Member's supplementary question on 10th June.

Mr. Hastings: Will the right hon. Gentleman ensure that there will not be a similar delay in connection with any charges which may be made relating to the two other cases?

Mr. Lyttelton: I am afraid that I cannot give any guarantee but I will use such influence as I can to speed things up.

Mau Mau Terrorists

Mr. Paget: asked the Secretary of State for the Colonies whether he has any statement to make with regard to the violent death of 51 of Her Majesty's subjects in Kenya shortly prior to 26th June.

Mr. Lyttelton: No, Sir.

Mr. Paget: Has the right hon. Gentleman observed the report in "The Times":
This has been another good day for the security forces. Fifty-one terrorists have been killed. … The troops discovered many small hide-outs tunnelled into the bracken.
With regard to this 25½ brace, can he tell us what evidence there is that these citizens who were killed were terrorists. Were they escaping arrest, were they resisting and were there any inquests held; and does he take killing on this scale as lightly as this?

Mr. Lyttelton: Naturally no one takes lightly the killing of these people, even if they are criminals found with arms in their hands in prohibited areas who did not respond to the challenge.

Mr. Paget: Does the right hon. Gentleman say that these were criminals taken with arms in their hands? Has he investigated that and has he any statement to make with regard to it? Does he know, or is that a pure guess?

Mr. Lyttelton: The hon. and learned Member must restrain himself. All that I have said was that I am not prepared to make a statement on the casualties inflicted on these terrorists.

Mr. Dugdale: Can the right hon. Gentleman throw a little further light on


the statement alleged to have been made by General Erskine recently that people were not to be beaten up in Kenya on racial grounds only?

Mr. Lyttelton: What reference that has to the Question on the Order Paper, I fail to see.

Coffee Co-operatives (Loans)

Mr. Beswick: asked the Secretary of State for the Colonies what proportion of the £10,000 loaned to the African farmers in Kenya during 1952 for the purchase of capital equipment was loaned to the coffee co-operatives.

Mr. Lyttelton: £2,000, Sir.

Radio Transmitters

Mr. Beswick: asked the Secretary of State for the Colonies the number of radio transmitting stations in Kenya and the estimated proportion of the Colony which is effectively covered by these transmissions.

Mr. Lyttelton: There are four radio transmitters in Kenya, two in Nairobi and two in Mombasa, operated by Messrs. Cables and Wireless, on which the Government rents time, using its own studio. I am inquiring about the exact extent to which these transmitters cover the territory and will write to the hon. Member.

Mr. Beswick: If the right hon. Gentleman finds that Kenya is not fully covered, will he see if something can be done to increase the range of transmission as, with the development of receiving sets, to which the hon. Member for Leominster (Mr. Baldwin) has referred, radio can play a most important part in the dissemination of information in Kenya?

Mr. Lyttelton: I agree with the hon. Gentleman, and as soon as I know whether the whole territory is covered, I will consider the matter again.

Oral Answers to Questions — MALAYA AND SINGAPORE

High Commissioner's Statement (Press Officer)

Mr. Edelman: asked the Secretary of State for the Colonies if the pronouncement of General Templer made at a recent official interview, describing in

offensive terms Mr. Aziz, Kuala Lumpur, representative of "Utusan Melayu," the most important Malay language newspaper, a member of the Legislative Council and an official guest at the Coronation, was made with his approval.

Mr. Lyttelton: I understand that the remarks referred to were made at a private interview with Mr. Aziz in his capacity as a journalist. An account of this private interview was subsequently published by Mr. Aziz, who was, of course, perfectly free to do so. The matter is one between the High Commissioner and Mr. Aziz: and I am not prepared to comment.

Mr. Edelman: Irrespective of the lack of taste in the article that has been published, is the right hon. Gentleman aware that this journalist was seen by the High Commissioner and then described as "a rat whose name stinks in South-East Asia"? Does the right hon. Gentleman consider this abusive and intemperate language fitting for a High Commissioner to use to a journalist in the Legislature, and does he further regard this as being the way to promote a liberal outlook in Malaya?

Mr. Lyttelton: I cannot expect that, under provocation, the High Commissioner or any Governor will always be able to confine himself to Parliamentary language.

Mr. Shinwell: Does the right hon. Gentleman know General Templar?

Mr. Edelman: In view of the very unsatisfactory nature of the reply, I beg to give notice that I will raise this matter at the first opportunity.

Co-ordinating Committee

Mr. Dodds-Parker: asked the Secretary of State for the Colonies the terms of reference of the Committee set up to consider closer consultation between Singapore and Malaya.

Mr. Lyttelton: This Committee has been set up to consider the co-ordination of policy and administration between the Federation of Malaya and Singapore. As the terms of reference are long, I will, with permission, circulate them in the OFFICIAL REPORT.

Following is the information:
The terms of reference of the Federation of Malaya-Singapore Joint Co-ordination Committee are:
To consider—
(i) those subjects on which

(a) there must be consultation and co-ordination,
(b) there must be consultation, and, if possible, co-ordination

on policy and, where appropriate, administration between the Governments of Singapore and the Federation of Malaya;
(ii) (a) the existing means of achieving that consultation and co-ordination and their effectiveness;
(b) means in addition to or in substitution of those already existing by which consultation and co-ordination, wherever necessary or desirable, can be achieved within the terms of the existing Constitutions of the two territories;
(iii) means (if any) by which co-ordination could be more effectively achieved by modifications of the existing Constitutions, without prejudice to the positions of Their Highnesses the Malay Rulers and of the Malay States in the existing Constitution of the Federation of Malaya;
and to make recommendations to the two Governments".

Tractors

Mr. Beswick: asked the Secretary of State for the Colonies, in view of the increased yields in the dry padi areas of Kelantan and Trengganu, Federation of Malaya, which have resulted from the methods of deep ploughing by tractors, what steps are being taken to extend the use of tractors; and, in particular, if any producer co-operatives are being organised to facilitate the use of tractors.

Mr. Lyttelton: I am consulting the High Commissioner of the Federation of Malaya and will circulate the information in the OFFICIAL REPORT.

Mr. Beswick: I wonder if at the same time the right hon. Gentleman will suggest that there are probably useful lessons to be learned from Ceylon, where the cooperative use of tractors has been highly developed and good results have been achieved?

Mr. Lyttelton: Yes, I think that is well known in Malaya. Most of the difficulties in connection with the greatly increased production of rice are concerned with harvesting rather than with ploughing or sowing, but I will certainly bear the suggestion in mind.

Mr. Beswick: But there are cases where the yield is increased by 70 pet cent, following the use of tractors, so it is worth while to look into it.

Oral Answers to Questions — NIGERIA

Labourers (Fernando Po)

Mr. J. Johnson: asked the Secretary of State for the Colonies the number of Nigerians who are working as labourers in Fernando Po.

Mr. Lyttelton: The number working under contract in Fernando Po and Rio Muni is believed to be about 12,000.

Mr. Johnson: Is the Minister aware that increasing numbers of landless labourers are leaving the over-populated mainland of Nigeria for this island, and does he think it a good thing in view of the unsatisfactory conditions of work obtaining on this island?

Mr. Lyttelton: I do not agree with the last part of the hon. Gentleman's remarks. The conditions under which the men work have been praised on the whole by the Spanish authorities, but that which gives the Spanish authorities and the Nigerian Government some disquiet is the increasing number of men who have been smuggled through. They are trying to stop that.

Mr. Nicholson: Do the Nigerian Government send officers to investigate the conditions under which these men work and live?

Mr. Lyttelton: Yes, there is an officer with this responsibility resident in that area.

Locomotives

Mr. J. Johnson: asked the Secretary of State for the Colonies the numbers of main-line locomotives used on the Nigerian State Railways; how many are over 10 years old; how many awaiting repair; and how many awaiting writing off.

Mr. Lyttelton: One hundred and ninety, on 27th June, of which 80 were over 10 years old. Twenty-nine were under repair in workshops: 41 were awaiting repairs: nine were awaiting write off.

Mr. Johnson: Would the right hon. Gentleman agree that too many old locomotives are spending a long time in the


shops at Ebute-Metta and that the chief cause of this is lack of spare parts? Will he do something about it?

Mr. Lyttelton: The situation of the Nigerian Railways which we inherited was extremely bad and it was difficult to put it right in a hurry, but we have done everything we can both to speed up the delivery of new locomotives and to increase the stock of spare parts.

Mr. Tilney: Could not the Nigerian Railways temporarily employ more expatriate technicians?

Mr. Lyttelton: That is another question. There again, particularly in the workshops, there is great room for improvement and we have tried to bring it about on the lines on which my hon. Friend speaks.

Mr. Rankin: Would it not help the state of affairs in Nigeria if the right hon. Gentleman transferred General Templer from Malaya to Nigeria?

Kano Riots

Mr. Sorensen: asked the Secretary of State for the Colonies if he has now received the report of the inquiry into the Kano disturbances; and whether the inquiry included investigation of the charges made by the local branch of the National Council of Nigeria and the Cameroons.

Mr. Lyttelton: The answer to the first part of the question is "No, Sir," and to the second part, "Yes."

Mr. Sorensen: Will the right hon. Gentleman say when the report is likely to be published? He will remember that last week he said he expected the report would be published in the very near future, or words to that effect. Can we have some idea when it may be forthcoming?

Mr. Lyttelton: The hon. Gentleman is always pressing me to assume the role of prophet about things over which I have no control. I am afraid that my answer is the same as it was last week, that it will be in the near future.

Oral Answers to Questions — WEST INDIES

Jamaica (Economic Development)

Mr. R. Robinson: asked the Secretary of State for the Colonies whether the Government of Jamaica have now com-

pleted their consideration of the Report of the International Bank for Reconstruction and Development entitled, "The Economic Development of Jamaica"; and how far it has been decided to give effect to these recommendations.

Mr. Lyttelton: The Government of Jamaica have issued a statement accepting the main proposals in the Report. I am sending my hon. Friend a copy of the statement.

Mr. Robinson: Can my right hon. Friend say whether the International Bank has made any offers of financial help in the event of the adoption of the recommendations?

Mr. Lyttelton: In the scheme there is a schedule of, speaking from memory, about £34 million to spend over a period and suggestions about how it should be used.

Mr. Shinwell: Will the right hon. Gentleman answer a question which I have put to him several times? Does that include development of inter-island transport services and also direct services between the United Kingdom and the West Indies?

Mr. Lyttelton: The categories under which the International Bank reported are fairly broad. One of them would, I think, certainly include the subject which the right hon. Gentleman has in mind.

Mr. N. Macpherson: Does this not indicate that arrangements for encouraging pioneer industries are all the more urgent?

Mr. Noel-Baker: In view of the great interest which is taken in this matter, will the right hon. Gentleman consider laying the Report in the Library of the House?

Mr. Lyttelton: Yes, certainly, Sir.

Cayman Island Air Services

Mr. R. Robinson: asked the Secretary of State for the Colonies whether the construction of the airstrip at Grand Cayman has now been completed; and what airlines are planning to provide services to this island.

Mr. Lyttelton: Yes, Sir. British West Indian Airways are now calling there weekly on their route from Kingston to Belize and also have plans for a service between Kingston, Grand Cayman and Havana.

Antigua (Cotton Ginnery)

Mr. R. Robinson: asked the Secretary of State for the Colonies when the Industrial Development Board in Antigua hopes to complete the modernisation of the Government-owned cotton ginnery.

Mr. Lyttelton: New machinery is on order and should be available by mid-1954. Plans for the buildings to house it are in hand.

Oral Answers to Questions — GOLD COAST

Government's Proposals

Mr. Fenner Brockway: asked the Secretary of State for the Colonies if he will make a statement regarding the White Paper officially prepared by Mr. Kwame Nkrumah, Prime Minister of the Gold Coast, proposing that the Colony should be given Dominion status with an all-African Cabinet.

Mr. Lyttelton: No, Sir. Any statement must await the proposals which the Gold Coast Government will no doubt make to Her Majesty's Government after their White Paper has been debated in the Legislative Assembly.

Mr. Brockway: Are there not certain sections of these proposals, such as paragraphs 47 to 53, dealing with the public service, which demand interim consideration by the Government? Has interim consideration yet been given?

Mr. Lyttelton: The hon. Member must not pick out details. On the Civil Service generally, there are some matters about which I hope to make an early statement, but I must not be drawn now beyond what I have said.

Togoland (Constitutional Relationship)

Mr. Sorensen: asked the Secretary of State for the Colonies what consideration has been given to the future constitutional relationship of Togoland to the Gold Coast; and whether it is intended to implement the recommendation of the United Nations Assembly contained in a resolution passed on 21st December, 1952.

Mr. Lyttelton: Constitutional changes in the Gold Coast might require reconsideration of its relationship with Togo-land under United Kingdom Trusteeship,

but that stage has not yet been reached. Any modification of the Trusteeship Agreement would require the consent of the United Nations. On the assumption that the reference in the second part of the Question is to the Togoland resolution of 20th December last, the answer is "Yes, Sir."

Oral Answers to Questions — UGANDA (MAKERERE COLLEGE)

Mr. J. Johnson: asked the Secretary of State for the Colonies the total number of students at Makerere College; and how many of these are African, Asian and European, respectively.

Mr. Lyttelton: There are at present 373 students at Makerere College, of whom 372 are Africans including Arabs from the Coastal region and Zanzibar, and one is Asian.

Mr. Johnson: Was not Makerere founded as an inter-racial college? Will the right hon. Gentleman encourage Europeans to go there? If this experiment is a success, does the right hon. Gentleman not think it will be a big help, to say no more, to future efforts in this field, particularly in Central Africa, at Salisbury?

Mr. Lyttelton: It is really largely a matter whether the professional school in Makerere acquires full recognition, but I can assure the hon. Gentleman that our hope is that it will become an inter-racial university instead of one confined almost entirely to Africans.

Mr. Alport: Can my right hon. Friend say what is the present strength of the teaching staff at Makerere College?

Mr. Lyttelton: Not without notice.

Oral Answers to Questions — MALTA (STATUS)

Captain Ryder: asked the Secretary of State for the Colonies what representations have been made to him regarding the constitutional and economic position of Malta; and whether he will make a statement.

Mr. Lyttelton: In a memorandum presented just before he left London recently, the Prime Minister of Malta suggested that responsibility for matters


relating to that island should be transferred to the Commonwealth Relations Office. The memorandum did not mention the economic position but Dr. Borg Olivier intimated orally that his Government would have to ask for further financial assistance. I am not yet in a position to make a statement.

Captain Ryder: Will my right hon. Friend bear in mind that there is a widespread feeling in this country that we should do all we can to help Malta achieve economic stability? Does he not think that this is a matter which might be discussed with the other countries of the Commonwealth?

Mr. Lyttelton: These are very important questions on which I do not wish to be drawn this afternoon. I would remind the House that, speaking from memory, more than £32 million has been given Malta since the war and that she is a State-aided Colony at the moment.

Mr. Gordon Walker: Is there not a much more general problem involved, that of countries in the Commonwealth which have reached the point of independence but are not big enough to be, in the full sense, nations in the world? Is not this an important matter which the Government should consider? I do not wish to hurry the right hon. Gentleman for an answer today.

Mr. Lyttelton: I entirely agree with the right hon. Gentleman that far wider questions than the amount of financial aid are raised, but I do not want to be drawn at the moment.

Mr. Driberg: While he is considering this very important matter, will the right hon. Gentleman take steps to ensure that misunderstandings do not occur, such as that at Windsor the other day, following so soon on the other difficulty about the Coronation?

Mr. Lyttelton: It is very difficult to attempt to alter a constitutional matter like that through a ceremonial.

Mr. J. Amery: In considering Prime Minister Borg Olivier's request about transfer to the Commonwealth Relations Office, will my right hon. Friend also consider the possibility of Malta coming under the Home Office with a status similar to that of the Channel Islands?

Mr. Lyttelton: These are questions on which I do not wish to be drawn this afternoon.

Oral Answers to Questions — TANGANYIKA (URAMBO EXPERIMENTAL FARM)

Mr. J. Grimston: asked the Secretary of State for the Colonies is he will make a statement on the future of the experimental farm at the Overseas Food Corporation at Urambo.

Mr. Lyttelton: The Corporation intend to keep the experimental farm going and have no change of policy in mind.

Mr. Beresford Craddock: Can my right hon. Friend say how much has been spent on the experiment since it was first started?

Mr. Lyttelton: I have not the figures with me, but my hon. Friend will find everything in Command 8125.

Oral Answers to Questions — COLONIAL SERVICE OFFICERS

Mr. Dodds-Parker: asked the Secretary of State for the Colonies how many regional economic planning, or liaison, officers there are in the Colonial Service; and how many have had practical business experience.

Mr. Lyttelton: None, Sir.

Oral Answers to Questions — CYPRUS (TOURIST INDUSTRY)

Mr. Dodds-Parker: asked the Secretary of State for the Colonies, in view of the promising prospects for the tourist industry at Cyprus, how far he is satisfied that hotel accommodation is sufficient in quality and quantity; and what steps are being taken to improve accommodation.

Mr. Lyttelton: Hotel accommodation is still increasing, but further expansion will be required to meet the continued growth of the tourist trade for which we hope. Higher standards are stimulated through the classification of hotels by a statutory board and the quality of the accommodation is steadily improving.

Oral Answers to Questions — COLONIAL JUDGES (TERMINATION OF APPOINTMENTS)

Mr. Marlowe: asked the Secretary of State for the Colonies what safeguards exist to prevent the removal from office of a colonial judge who is fit, competent and of good behaviour, at the will of the executive before he reaches his retiring age; and in what circumstances, before the pleasure of the Crown is exercised to terminate any such appointment, an address is required either from the Imperial Parliament or from the colonial legislative assembly concerned.

Mr. Lyttelton: The removal of a colonial judge, while fit and under retiring age, from an office which still existed would be regarded as dismissal and therefore require reference to the Judicial Committee of the Privy Council. I do not know of any circumstances in which an address from Parliament or a colonial legislature is required before the appointment of a colonial judge can be terminated.

Mr. Marlowe: Is my right hon. Friend aware that High Court judges in this country can only be dismissed or removed by legislation of both Houses of Parliament and that a recent High Court ruling has shown that a colonial judge can be removed at the will of the Executive at any time without any reason given? Does not that make nonsense of the statement which my right hon. Friend made last week that a colonial judge enjoyed the same security, and is he not quite wrong when he endorses the statement of his predecessor that there is no difference between the two? Does he not agree that this is a matter for investigation?

Mr. Lyttelton: I think that my hon. and learned Friend is quite right in taking a particular interest in this Question. He has, in the course of his supplementary question, attributed a number of statements to me which I did not make. In the case of a dismissal, as I have said, it would require the assent of the Secretary of State and reference to the Judicial Committee of the Privy Council. I am satisfied that de facto colonial judges enjoy the same immunity from dismissal from the Executive as High Court judges in this country. If that position can be improved upon by any practical methods. I will examine them.

Mr. Marlowe: My right hon. Friend is misinformed again, because in the particular case in which High Court proceedings were taken there was no reference to the Judicial Committee of the Privy Council at all. His Department keep maintaining that people cannot be removed without close investigation by the Judicial Committee and that they enjoy the same security as in this country, but this particular judge was removed without any such inquiry and without any cause of complaint made against him.

Mr. Lyttelton: My hon. and learned Friend keeps on referring to the dismissal of this judge. He was not dismissed.

Mr. Gordon Walker: If the right hon. Gentleman says that these colonial judges enjoy the same practical security as judges here, would it not be wise to give them the same legal security, as well?

Mr. Lyttelton: That is a question that I am quite willing to examine. It is not quite so simple as it sounds, because it would probably have to depend on local legislation and local legislation can be set aside by other local legislation. I am willing to re-examine the matter, but my present opinion, which is liable to change, is in fact—[Interruption.] Anybody's opinion can be changed on examination of the facts. It is only the obstinacy of some hon. Members opposite which leads them to take a wrong view.

Mr. Marlowe: asked the Secretary of State for the Colonies upon what date his Department decided that the appointment of Mr. Terrell as a judge in Malaya was an appointment held at the pleasure of the Crown; and why Mr. Terrell was not so informed, either at the time of his appointment or in the correspondence between 1942 and 1952, prior to the legal proceedings taken by him.

Mr. Lyttelton: Such apointments have always been regarded as held at the pleasure of the Crown, and there was thus no need either to decide, or to inform Mr. Terrell about the nature of his tenure of office. In a Petition to The King in May, 1946, Mr. Terrell admitted that a Malayan judgeship was held at His Majesty's pleasure.

Mr. Marlowe: Is my right hon. Friend aware that during 10 years of correspondence this defence by his Department was never raised at all? It was only


when the matter came to legal proceedings and, for the first time, the opinion of Counsel was taken, that this point was put in the pleadings last year. Does he not think that the real position is that the Colonial Office do not know themselves and have never suggested otherwise until they took legal advice on the matter?

Mr. Lyttelton: I am afraid that once again my hon. and learned Friend is misinformed. In 1946 the relevant paragraph in the Petition began:
Your petitioner admits that, according to ordinary law, a Malayan judgeship is held at Your Majesty's pleasure.

Mr. Marlowe: Has my right hon. Friend looked at the correspondence in this matter? Whatever the legal point of this matter may be, is he aware that this judge was appointed by letters which were addressed to him and which gave him a contract for seven years, and his office was terminated before that time was up? Does he not think that it is unworthy conduct of his Department to go back on a contract like that which was in plain writing?

Mr. Lyttelton: I am afraid that I cannot admit any of my hon. and learned Friend's premises in this case.

Oral Answers to Questions — CENTRAL AFRICA

Radio Receivers

Mr. Baldwin: asked the Secretary of State for the Colonies what arrangements are being made in Eastern and Central Africa for the sale or distribution of saucepan radios; and how far there is sufficient experience on their use to gauge their utility and effect.

Mr. Lyttelton: The sale and distribution of "saucepan" radio receivers, which have been in use since 1949, is the responsibility of the British firm which manufactures and exports them. I am informed that 25,000 receivers have been sold and that there is evidence, through increasing sales, that they are useful and effective.

Northern Rhodesia (Kafue Dam Project)

Mr. Baldwin: asked the Secretary of State for the Colonies what consideration has been given to raising the necessary capital for the construction of the Kafue Dam in Northern Rhodesia.

Mr. Lyttelton: Considerable capital will certainly be required for hydroelectric development in Central Africa and consideration is being given to the best way of raising it. But no action can be taken until agreement has been reached in Central Africa on priorities as between the possible projects, of which the Kafue scheme is one.

Mr. Baldwin: Would my right hon. Friend consider utilising some of the funds of the Colonial Development Corporation for the development of these schemes, which would be more useful to the territories than some of the primary produce schemes which are losing money?

Mr. Lyttelton: As soon as the priorities have been settled, the question of finance will come up, and the suggestion of my hon. Friend will certainly not be disregarded.

Oral Answers to Questions — SEYCHELLES (EDUCATION)

Mr. Sorensen: asked the Secretary of State for the Colonies if the Seychelles Government intend to adopt the proposal made by their official committee to dismiss 70 teachers and increase the size of classes; and what proportion of primary school children in the Seychelles are given facilities for secondary school education.

Mr. Lyttelton: The Legislative Council's Select Committee on the Colony's 1953 Estimates proposed that expenditure on education should be decreased by reducing the number of primary school teachers and increasing the size of classes. This Committee has a majority of unofficial members. Its proposals were adopted by the Legislative Council and are being put into effect. I am asking the Governor for the precise number of teachers who will be affected by these reductions. With regard to the second part of the Question, the latest figures available show about 550 secondary and post primary school pupils and about 4,600 primary school pupils.

Mr. Sorensen: Does the right hon. Gentleman agree that to reduce the number of teachers and increase the size of classes is extraordinarily bad in a


Colony of this kind, and cannot he do anything to try to persuade the Legislature responsible to reconsider their very retrogressive decision?

Mr. Lyttelton: I agree that this is most regrettable and a step backwards. It is, of course, due to financial stringency in the Colony, although the provision of education in 1953 is nearly 13½ per cent. of the year's total estimated expenditure, compared with 9·7 per cent. in 1952.

Oral Answers to Questions — ROYAL NAVY

Chatham Dockyard (Deputy Superintendent)

Mr. Albu: asked the First Lord of the Admiralty when the Deputy Superintendent (industrial) appointed to Chatham Dockyard commenced his duties.

The Civil Lord of the Admiralty (Mr. Wingfield Digby): This officer will take up his duties at Chatham on 15th July; he is at present attached to the headquarters of the Director of Dockyards in order to prepare himself for these duties.

Mr. Albu: Does the hon. Gentleman remember that on 6th May he informed me that this appointment had been made? Is this not another example of the extraordinary delay in business in the Admiralty?

Mr. Digby: Surely the hon. Member will be aware that it was necessary for this officer, who had important duties before, to hand over properly to another person and then to prepare himself for his new task?

Mr. Albu: But the Admiralty has had plenty of time to consider the recommendation made by the Select Committee two years ago, and even their reply has been in the hands of the House now for some months.

Mr. Digby: It was necessary to hand over these duties and also to find new office accommodation, since this is a new task. I think there has been all reasonable speed with regard to this appointment.

Dartmouth Entrants

Mr. Gower: asked the First Lord of the Admiralty how many entrants into Dartmouth during the past six years were

from Wales and Monmouthshire; and if he will make a statement.

The Parliamentary and Financial Secretary to the Admiralty (Commander Allan Noble): Twenty-three boys from schools in Wales and Monmouth were entered at Dartmouth in the years 1947 to 1952, inclusive.

Mr. Gower: In view of the fact that these numbers are so low, will my hon. and gallant Friend ask the First Lord to confer with the Minister of Education so that the advantages of this career may be more widely known to students in Wales?

Commander Noble: My hon. Friend will have noticed that in the recent report of the Committee on Cadet Entry these low numbers were commented on and certain recommendations made for further publicity. My right hon. Friend is considering those recommendations.

Mr. Peter Freeman: As Monmouthshire is designated in this Question, is it to be assumed that it is not in Wales and, if it is not in Wales, is it in England, and if not, can the hon. and gallant Gentleman say where it is?

Coronation Day (Damaged Uniforms)

Mr. Driberg: asked the First Lord of the Admiralty if he will now make a statement on the payment of compensation to officers and ratings on Coronation day duty whose uniform and equipment were damaged by rain.

Commander Noble: Assessment of compensation involves consultation with a number of naval authorities and I am not able to add any details to the reply which my right hon. Friend made to the hon. Member on 1st July.

Mr. Driberg: As it is more than a month since the Coronation, could the hon. and gallant Gentleman say how much longer this process is likely to take? Will he give an assurance that, as a result of it, no man who took part in this parade will be worse off financially for doing so?

Commander Noble: I think the hon. Gentleman will realise that what we are trying to do is to find the best method of dealing with this problem which


involves a large number of men. I can assure him that we are determined that no officer or man shall suffer hardship.

Miss Ward: Could I ask my hon. and gallant Friend whether the same arrangements are being made for the Army and the Air Force?

Commander Noble: I do not think that is a question for me.

Miss Ward: Would he convey that question to his colleagues?

Mr. Speaker: The hon. Lady had better put that question down.

Oral Answers to Questions — POST OFFICE

Facilities, Wickford

Mr. Braine: asked the Assistant Postmaster-General whether, in view of the inadequacy of the existing post office facilities at Wickford, Essex, he will now establish a Crown Post Office.

The Assistant Postmaster-General (Mr. David Gammans): The building of a Crown Office at Wickford is already planned but, as the Post Office is limited in the amount it can spend on new buildings, I cannot say when it will be possible to make a start. Meantime, possible steps for relieving congestion at the present office are under examination.

Mr. Braine: Is my hon. Friend aware that serious inconvenience is caused to traders and the public in this growing Essex town because of the lack of postal facilities? Can he say whether any positive steps are being taken to remedy this state of affairs?

Mr. Gammans: Yes, I am aware of that fact, and my hon. Friend will be pleased to hear that a site for the new building has already been obtained.

Temporary Staff Recruitment (Convicted Persons)

Mr. Lewis: asked the Assistant Postmaster-General if he is aware that John Reginald Christie was enrolled, in 1921, as a temporary postman; that, during his service, he was found guilty of stealing and embezzlement, sentenced to three months' imprisonment and yet, in 1947, was again employed as a clerk in the General Post Office Savings Department;

and what steps are taken by his Department to prevent the continued employment of persons with criminal records.

Mr. Gammans: Yes, Sir. John R. Christie succeeded, in May, 1946, in obtaining employment as a temporary clerk in the Post Office Savings Department by making false statements in his application form. In April, 1950, when his true record was revealed, he was dismissed. The practice is to engage temporary staff only through the Ministry of Labour employment exchanges, which, so far as possible, verify the man's past record. In this case the criminal conviction some 25 years earlier did not come to light.

Mr. Lewis: Surely it should not have taken the Post Office three years to have found that out? Surely they do something other than simply accept a form and the statements that it contains. Do they not make some inquiry?

Mr. Gammans: I do not know whether the hon. Member is recommending that we should have a compulsory system of thumb prints. In this case, all steps were taken to find out the man's record from his previous employers.

Oral Answers to Questions — EUROPEAN DEFENCE COMMUNITY

Mr. Wyatt: asked the Prime Minister whether he will invite the Prime Ministers of France, Italy, Holland and Belgium and the Chancellor of the Federal German Republic, to a conference to consider the means by which Britain can take part in a European army which does not contain those features of the European Defence Community which have made Her Majesty's Government unable to join that community.

The Chancellor of the Exchequer (Mr. R. A. Butler): No, Sir. The European Defence Community Treaty was signed by the governments of the countries mentioned by the hon. Member, and by Luxembourg. The policy of Her Majesty's Government is to do their utmost to bring about the creation of the European Defence Community at the earliest possible date and to do all they can to support it and associate themselves with it.

Mr. Wyatt: Yes, but has not the Chancellor of the Exchequer noticed that the European Defence Community is about to collapse, and will not now be ratified, and are we now to take it that under the present regime no decisions on these important issues will be taken for an indefinite period?

Mr. Butler: No, Sir. As is not infrequently the case, the hon. Gentleman is totally wrong. One of the main reasons for the projected talks in Washington is to undertake discussions on this particular subject among others. The hon. Gentleman may feel assured that this matter will be discussed with the United States and French Governments and that there could be no better venue for such a discussion.

Mr. Noel-Baker: Since the proposals made by Her Majesty's Government and British co-operation in this scheme may well be decisive with the six European Parliaments concerned, and since they are also of great importance to this country, is it not about time that the Government told us what it is that they have proposed?

Mr. Butler: I think the views of the Government on this matter have frequently been expressed and, as the right hon. Gentleman knows, the E.D.C. has the full support of Her Majesty's Government, the United States Government and the other N.A.T.O. Governments, and the next step is to ratify and not to revise it.

Mr. Wyatt: But is not the right hon. Gentleman aware that we have never yet been told what proposals we have made, or what proposals have been made to us by the Governments of France and the other Governments concerned? Is it not a fact that in the present state of affairs in Her Majesty's Government it is quite impossible for them to take the initiative on anything?

Mr. Butler: The hon. Gentleman should think again before he makes such a remark. The acting Foreign Secretary is proceeding tonight to Washington to negotiate on these and other matters. I think it would be much better if this House were to wish him well in his mission rather than to make remarks such as the hon. Gentleman has made.

Mr. Noel-Baker: Of course everybody in the House will wish the acting Foreign

Secretary well in his mission, but the Chancellor seems not to be aware that we have never been told what we proposed to the French and what the French answered. What we want to know is what has passed.

Mr. Butler: The best answer to that is that the House will obviously have to be informed of the results of the conversations in Washington, and as those will be the most recent conversations on this subject, it would be wise for the House to await the outcome of those conversations.

Mr. Shinwell: But is the right hon. Gentleman aware that negotiations about the European Defence Community have been going on for upwards of two years, and that the present Government have been participating in the discussions? Why is he so snooty when questions are asked?

Mr. Butler: I am not nearly so snooty as the right hon. Gentleman usually is. The attitude of Her Majesty's Government has been consecutive in this matter. It would be a great mistake to lay all the difficulties and delays in ratifying E.D.C. at the door of Her Majesty's Government.

Mr. Wyatt: Can we have any assurance that we shall ever be told what is discussed about this matter at the Washington conference, because we have never yet been told what has been discussed between ourselves and the E.D.C. countries over the last six months, although I have asked repeated questions and have been told every time to wait and see?

Mr. Butler: I have already said, and I will repeat, that it will be the intention of the Government to inform the House of the outcome of the conversations in Washington, and I hope the hon. Gentleman and other hon. and right hon. Gentlemen will remain content with that.

Mr. H. Morrison: May I ask the right hon. Gentleman whether it is the case that he feels in a great difficulty about answering questions on this matter, and also whether, in those circumstances, it is any improvement of the situation for him to get rather cross and bad-tempered about it?

Mr. Butler: The right hon. Gentleman will get no rise out of me. I was simply answering in kind to a somewhat pert observation of the hon. Gentleman opposite.

Oral Answers to Questions — COMMONWEALTH RELATIONS OFFICE (MALTA AND GOLD COAST)

Mr. Wyatt: asked the Prime Minister whether he will arrange for Governmental responsibility for Malta and the Gold Coast to be transferred from the Colonial Office to the Commonwealth Relations Office.

Mr. R. A. Butler: This proposal has very recently been put forward by the Prime Minister of Malta; and may be submitted later in the year by the Gold Coast Government. The question is not a simple one and Her Majesty's Government are not prepared to make any further statement at present.

Mr. Wyatt: Is this not indicative of the fact that the Government seem unable at the moment to take any decisions in major matters? Would it not be wise to meet the feeling that exists in Malta and the Gold Coast before it is too late and when it can be met fairly and sensibly in this way? Why cannot the acting Prime Minister tell us something about it?

Mr. Butler: Had he listened to my reply, the hon. Member would have heard that the proposal from the Gold Coast has not yet been submitted. I think, therefore, that it would be reasonable to await it.

Mr. Alport: Is my right hon. Friend aware that there is an urgent need to reconsider the present basis of the responsibilities of the Colonial and Commonwealth Offices? Will he consider publishing the Report of the Smaller Territories Committee which has been in the hands of the Colonial Office, I think, for some time?

Mr. Butler: I will certainly consult my right hon. Friend the Colonial Secretary on the matter put forward by my hon. Friend.

Oral Answers to Questions — TELEPHONE SERVICE

Kiosks, Wales

Mr. Gower: asked the Assistant Postmaster-General how many new telephone kiosks have been provided in each of the Welsh counties since 1946; and what number are to be erected in each county this year.

Mr. Gammans: As the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Gower: Would my hon. Friend not agree that those figures reveal a steady decline in the provision of kiosks in Wales since 1949? Will he do something to improve the position?

Mr. Gammans: No, I do not agree. I think the figures reveal that Wales is in a far more advantageous position than either England or Scotland.

Following are the figures:


County
New kiosks provided in the period from 1st January, 1947 to 31st December, 1952
Number of kiosks expected to be erected during year ending 31st December, 1953


Anglesey
28
6


Caernarvon
80
12


Denbigh
90
20


Flint
43
6


Merioneth
54
12


Montgomery
62
10


Brecknock
33
13


Cardigan
99
13


Carmarthen
141
16


Glamorgan
214
46


Pembroke
80
10


Radnor
33
7


The figures shown include both urban and rural kiosks.

Mr. Gower: asked the Assistant Postmaster-General what steps he will take to increase the provision of telephone kiosks in the rural areas of Wales and Monmouthshire.

Mr. Gammans: During the last three years we have provided an average of 148 rural kiosks a year in Wales and Monmouthsire. In spite of our limited resources and the heavy cost of installing kiosks in the more remote areas, we hope to provide a further 106 in 1953–54.

Mr. Gower: Is the Minister aware that that the Rural Councils Association in Wales are greatly concerned at the inadequacy of the provision of these kiosks? Will my hon. Friend look further into this position?

Mr. Gammans: We should certainly like to install more kiosks, but, as I have already assured my hon. Friend, so far as the average is concerned Wales is far above it.

Exchanges (Expenditure and Staffing)

Mr. Deedes: asked the Assistant Postmaster-General the current annual estimated expenditure on new or extended telephone exchanges outside the London area; and how far this represents an increase on the year 1951–52.

Mr. Gammans: Including the cost of new building works and installation, the estimate for the current year is £10·4 million. This is 11 per cent. more than the expenditure in 1951–52.

Mr. Deedes: I appreciate that there has been an increase, but is my hon. Friend satisfied that it is sufficiently big to overcome the considerable leeway in the provision of rural telephones?

Mr. Gammans: No, Sir. The Post Office can certainly do with more capital than is at present allotted to it if it is to catch up with the leeway. I am, however, pleased to be able to tell the House that the waiting list for telephones has decreased quite considerably in the past year.

Mr. Hobson: Has the Chancellor of the Exchequer now removed the ban on the building of new telephone exchanges?

Mr. Gammans: The Estimates for next year are under consideration.

Mr. Erroll: asked the Assistant Postmaster-General what arrangements he is making to ensure that extensions to existing telephone exchanges will be adequately staffed by suitably trained and qualified personnel.

Mr. Gammans: It is our standing practice to make arrangements well in advance to ensure that the requisite trained and qualified staff is available when required. If my hon. Friend has in mind any particular case where our arrangements appear to have failed, I shall be glad to make inquiry.

Mr. Erroll: I shall be pleased to advise my hon. Friend accordingly.

Oral Answers to Questions — WIRELESS AND TELEVISION

Facilities, North Scotland

Lord Malcolm Douglas-Hamilton: asked the Assistant Postmaster-General whether he will ensure that television reception is facilitated in the Western Highlands.

Mr. Gammans: I would refer the noble Member to my answer to the hon. Member for Caithness and Sutherland (Sir D. Robertson) on 24th June.

Lord Malcolm Douglas-Hamilton: Does that answer mean that people in the Western Highlands will have to wait an indefinite period before they are likely to get television facilities? Although I appreciate that there are certain difficulties in affording facilities in this area, will my hon. Friend bear this matter in mind and try to get on with the provision of these facilities at a much earlier date?

Mr. Gammans: I should be misleading my hon. Friend if I gave him any reason for believing that there was a chance of television facilities being provided in the Western Highlands within an appreciable period. I hope we do not regard the criterion of a good life as being merely the provision of television facilities.

Mr. Woodburn: Is it technically practicable under existing conditions to broadcast television programmes through such mountainous areas?

Mr. Gammans: It is not technically impossible, but it is extremely expensive.

Major McCallum: Is my hon. Friend aware that the station that is to be erected for Belfast will serve the greater part of the Western Highlands very well?

Mr. Hector Hughes: Will the Assistant Postmaster-General consult the Attorney-General and the Lord Advocate on the constitutional question as to whether the Western Islands are still regarded as being in the United Kingdom? If they are, why not give them parity of treatment with the rest of the United Kingdom?

Mr. Gammans: That does not fall within my province.

Lord Malcolm Douglas-Hamilton: asked the Assistant Postmaster-General whether he will arrange for the Third Programme to be heard throughout the North and West of Scotland.

Mr. Gammans: I regret that this is not possible with the wavelengths at present available to the B.B.C., and the Corporation cannot hold out any hope of being


able to make such arrangements for some time to come.

Lord Malcolm Douglas-Hamilton: Does this not indicate a wholly unsatisfactory state of affairs? Does my hon. Friend not think it would be fair that the people living in these areas should pay a proportionately less tax for wireless and television facilities?

Mr. Gammans: I am surprised at anybody getting a television set if they have not already assured themselves that they can get reception.

Adaptors and New Receivers

Sir R. Grimston: asked the Assistant Postmaster-General when the technical information promised in paragraph 10 of the White Paper, Command Paper No. 8550, is to be given to the radio industry.

Mr. Gammans: The publication of the Report of the Television Advisory Committee, together with the information contained in the statement made yesterday by my noble Friend, should enable the radio industry to go forward with the design and development of adaptors and new receivers.

Sir R. Grimston: Is my hon. Friend aware that neither the Report nor the statement published yesterday gives sufficient information to enable the radio industry to proceed with development? Does my hon. Friend contemplate having discussions with them or giving further information in the near future?

Mr. Gammans: We shall be pleased to meet the radio industry if they feel that the information already given to them is inadequate.

Captain Orr: Will my hon. Friend give a firm undertaking that the two channels available in Band Three will be reserved for commercial television?

Mr. Gammans: That is outside the scope of the Question.

Crystal Palace Station

Mr. Gibson: asked the Assistant Postmaster-General whether he is aware that the proposed new British Broadcasting Corporation station at the Crystal Palace will be on land which is public open space; what consultations took

place with the London County Council before the decision to build there was made; how many acres of land will be covered by the new station; and whether he will provide an equivalent area of open space to compensate for the land to be taken by the British Broadcasting Corporation.

Mr. Gammans: I am informed by the B.B.C. that their proposed new television station at Crystal Palace will not be on public open space, and the last part of the Question does not, therefore, arise. The London County Council are the owners of the land which the Corporation wishes to buy and negotiations between them are still in progress. The area of the site will not exceed two acres.

Mr. Gibson: Is the Minister aware that about two years ago, this House passed an Act which handed over to the control of the London County Council the whole of the land of Crystal Palace, including the piece upon which the old palace stood, and which laid down that it must be used for public purposes as an open space, and that the original plans were for quite different buildings? Therefore, if there is to be a television station there—I am not objecting to the erection of the station—surely it is reasonable that the provision whereby local authorities must provide alternative open space if they take away public land ought to be applied in this case?

Mr. Gammans: Perhaps the hon. Member did not quite hear the first part of my answer. This station will not be on a public open space.

Mr. F. Harris: Is my hon. Friend aware that my constituents in the Crystal Palace area are very well pleased that the B.B.C. have decided to put this new station in the Crystal Palace area?

QUESTIONS TO MINISTERS

Mr. Snow: On a point of order, Mr. Speaker. On 17th June I put down a Question of a constituency nature addressed to the Minister of Housing and Local Government. I put it down with approximately a month's notice to the Minister concerned because I knew, incidentally, that it would involve searching certain historical records. Very properly


I received a note from the Minister concerned, or his secretary, to the effect that it had been transferred to the Minister of Agriculture.
The Questions to be answered orally by the Minister of Agriculture are due for tomorrow, and this morning I looked at the Order Book to check that my Question was down. I found that the original date for answering this Question by the Minister of Housing and Local Government had been retained on the Order Book for Tuesday, 14th July, but, according to the list of Ministers answering Questions on that day, the Minister of Agriculture does not answer Questions. Although I readily admit that it is up to me to check that the Minister to whom the Question has been referred is in fact to answer Questions on that day, if he is not answering it seems that the procedure is prejudicial to the interests of hon. Members.

Mr. Speaker: In answer to the point of order raised by the hon. Member, I have frequently stated that the transfer of Questions from one Department to another is entirely the responsibility of the Department. It is impossible for me to say what are the precise limits of responsiblity of any Minister; Ministers themselves must be the judges of that. As regards the peculiar circumstances of the hon. Member's Question, it was up to him, as I think he correctly stated, to put it down for some day convenient to himself. If it was put down on the day when the Minister was not answering, he might have had it withdrawn that day and put down for another day. I think it is proper for hon. Members when Questions are transferred to exercise some vigilance to make sure that they are put down for a day convenient to themselves when they can attend and when answers can be given.

Mr. Snow: I do appreciate what you have said, Mr. Speaker, but would it not be for the convenience of hon. Members if in the course of routine notification that a Member's Question has been transferred to another Minister, it was stated that this might involve altering the day when the Question is to be answered?

Mr. Speaker: I think hon. Members are capable of looking after their own interests in that matter.

LONDON TRANSPORT COMMITTEE OF INQUIRY

The Minister of Transport (Mr. Alan Lennox-Boyd): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the Committee of Inquiry into London Transport.
On 28th April I announced in the House that the Government had decided that an inquiry would be held into London Transport and that a Committee would be appointed for this purpose. I am now able to announce the names of the members of this Committee—
Mr. S. P. Chambers, a Deputy Chairman of Imperial Chemical Industries Limited, and formerly a Commissioner of Inland Revenue, has kindly consented to be Chairman and the following to be Members:—
Mr. D. E. Bell, O.B.E., A.M.I.E.E., M.Inst.T., formerly General Manager of the Yorkshire Woollen District Transport Company.
Miss Betty Corn, A.C.I.S., D.P.A., a member of the staff of Holborn Borough Council.
Mr. P. T. Heady, formerly General Secretary of the Railway Clerks Association.
Sir Frederick Leggett, K.B.E., C.B., formerly a Deputy Secretary of the Ministry of Labour and National Service.
Mr. Victor Mishcon, Chairman of the General Purposes Committee of the L.C.C.
Mr. T. B. Robson, M.B.E., M.A., F.C.A., immediate past President of the Institute of Chartered Accountants and a Senior Partner of Price Waterhouse & Company.
Mr. George Schwartz, Deputy City Editor of the "Sunday Times.

Mr. H. Morrison: Assuming that the right hon. Gentleman has got to go on with this curious inquiry, which has been invented to conciliate his back benchers on a matter which is a different matter and not related to it, may I ask him to give some further elaboration about these appointments? What is the idea of the deputy chairman of a private monopoly being appointed to inquire into a public monopoly? Is the idea that the deputy chairman of a private monopoly is liable to be impartial and to have a fellow feeling in looking into a public monopoly?
May I ask why it is that the manager of a private enterprise, capitalist, undertaking should be a member? Would the Minister be so good as to tell us, as I notice Miss Betty Corn is a member of the staff of Holborn Borough Council, what her rank in the service of the council


is? May I ask why the right hon. Gentleman should have included on this Committee a journalist of a particularly Conservative, Kemsley type, who has strong views and prejudices about this matter? Why has he picked him out to serve on this Committee?
In short, does not the right hon. Gentleman think he has really selected a Committee which, in the respects to which I have drawn attention, is not particularly appropriate for this investigation?

Mr. Lennox-Boyd: With the leave of the House, I will answer those four questions which the right hon. Gentleman has addressed to me. In regard to Mr. Chambers, the proposed Chairman, may I say that many other people, now chairmen of nationalised industries, have in their time made many inquiries into private organisations, but Mr. Chambers has a wide record for both public and private service. He is now a Deputy Chairman of I.C.I., but he was Income Tax Adviser to the Government of India, Assistant Secretary to the Board of Inland Revenue, Secretary of the Board, a Commissioner of Inland Revenue and Chief of the Finance Division of the Control Commission for Germany. I should have thought that, taken together, those were pretty formidable qualifications.
As to Mr. Bell, he is not now the manager of any company. He has retired, but the British Transport Commission have a 50 per cent. holding in the company of which he was manager. As to the lady working for Holborn Borough

Council, she is a committee clerk and one of the ordinary travelling public, who have their own ideas on this matter. Finally, I included Mr. George Schwartz in the hope that the Report, which I know will be valuable, will also be very readable.

Captain Ryder: Whilst thanking my right hon. Friend for the appointments, which will be warmly welcomed, may I ask, with particular reference to the remarks of the right hon. Member for Lewisham, South (Mr. H. Morrison) to the effect that this inquiry only came about as a result of representations from back benchers, is it not a fact that it was also pressed for repeatedly by London County Council?

Mr. Ernest Davies: Would it not have been better if these gentlemen had a knowledge of transport rather than a knowledge of journalism? Will the Minister give an undertaking that he will immediately draw the attention of the Chairman to the desirability of excluding deliberations on matters appertaining to wages, working conditions and labour relations, particularly in view of the composition of the Committee?

Mr. Lennox-Boyd: We have had quite a few Questions on that and I gave a full answer on 4th May.

Mr. Davies: Will the Minister repeat that assurance?

Mr. A. J. Irvine: As the Minister is bent on making a farce of this, will he explain why he has not nominated the Editor of "Punch"?

Orders of the Day — FINANCE BILL

As amended (in Committee and on recommittal), further considered.

New Clause.—(AMENDMENT OF S. 20 OF INCOME TAX ACT, 1952.)

Section twenty of the Income Tax Act, 1952, shall read as if there were included after subsection (4) thereof the following subsection:
(5) If the surveyor shall after a statement has been delivered under subsection (4) of this section by a notice served on the person who has delivered the statement so require such person shall within the time limited by the notice swear and deliver to the surveyor an affidavit that to the best of the knowledge information and belief of such person after due and proper inquiry made by him all amounts by which the gross amount of any profits, gains or income, as the case may be, returned by such person in the statement have been reduced, being the amounts of any expenditure incurred by such person or anyone in his employment, or, in the case of a limited company, any director, officer or servant of such company in the provision of entertainment or in travelling by any means or in the provision of transport or the means of transport or as living expenses for himself or any other person of any character were

(a) in the case of a person chargeable under Schedule D in respect of the profits or gains of a trade profession or vocation disbursements or expenses wholly and exclusively laid out or expended for the purposes of such trade profession or vocation, and
(b) in the case of a person chargeable under Schedule E in respect of the income from an office or employment expenses incurred wholly exclusively and necessarily in the performance of the duties of the said office or employment.

In the case of a limited company, such affidavit shall be jointly sworn by the secretary of the company and one director and any person failing without reasonable excuse to comply with any such notice so served on him by the surveyor shall be liable to be proceeded against and punished as provided for in subsection (3) of section twenty-five of this Act."—[Sir F. Soskice.]

Brought up, and read the First time.

3.40 p.m.

Sir Frank Soskice: I beg to move, "That the Clause be read a Second time."
This Clause again raises the subject of entertainment expenses and similar expenses claimed by taxpayers as deductions in making their Income Tax and Surtax returns. As the House will know, this subject was raised in a proposed new Clause in almost identical terms which

we put down for the Committee stage of the Bill and which was then discussed. This Clause goes beyond that Clause in scope, in that it includes, in addition to entertainment expenses, living and transport expenses.
The House may ask why my right hon. and hon. Friends and I have thought it necessary to revert so soon to this subject and I would answer that at the outset. We feel strongly that the debate on this most important topic was left in a very unsatisfactory state. We did not get an answer from either of the Ministers who replied in Committee to the proposals that we put forward. From the Financial Secretary we had a speech which was courteous, helpful and painstaking, but that was followed by a speech from the Chancellor about which I can only say that it was the sort of speech he generally makes.
I sought to deploy the arguments in favour of the proposal when I moved the original Clause, and as I imagine hon. Members interested in this topic will have had the opportunity of reading the debate in the OFFICIAL REPORT, I do not propose to repeat those arguments. We thought the debate was left in a state which was completely unsatisfactory for this reason. The Financial Secretary and the Chancellor both recognised that there was a serious problem. I need only refer to what the Chancellor said. He said that it certainly was an abuse, but that he thought it was an exaggeration to call it a widespread abuse.
He went on to say that he was in daily contact with the Inland Revenue. He knew that there were difficulties in this respect and that the Revenue were anxious to see that there was no further abuse. I do not mind whether it is called a widespread abuse or not. The fact that there is an admitted abuse in the matter of claiming expenses of this sort surely means that there is a serious problem to investigate.
When I moved the original Clause I founded myself on the evidence of my own impressions, contacts and conversations, and now I am able to add the evidence of the Financial Secretary and the Chancellor of the Exchequer himself, both of whom agree that there is an abuse, and that it is an abuse which the Inland Revenue are anxious to check.


They do not want it described as a widespread abuse, but quite obviously, without beating about the bush we are faced with a serious abuse which it is our duty, I submit, as hon. Members of this House, to do whatever we can to check and to stop.
It was in that mind that we put down the original Clause and that we now put down this proposed new Clause. I would explain at once that the reason for the difference between this Clause and the original Clause was that the Chancellor, having admitted that this abuse existed and that it was a matter with which the Inland Revenue were concerned, asked himself whether he should accept our proposal. He said:
Now we come to the positive issue—shall we or shall we not accept the new Clause? I think that the weakness of the new Clause is precisely this: if new inquisitorial powers are necessary, why limit their scope to this sole purpose of entertainment expenses?"—[OFFICIAL REPORT, 23rd June, 1952; Vol. 516. c. 1847.]
3.45 p.m.
The Chancellor, unfortunately, was unable to be present during the early part of the debate and, therefore, did not hear the reason why we had limited ourselves in that way when formulating the Clause. It was because we thought it necessary to begin on a narrow front. If our proposal was accepted and was workable it would be easy to extend the front and to take in other forms of expenses. But we started modestly in the hope that the Government would be able to consider the serious proposals we put forward. If they considered it a wise thing to do the Government themselves could then extend the Clause.
Not having heard the reason the Chancellor rejected the Clause out of hand because he thought it concerned too narrow an aspect of the problem. But that is easily cured by extending the Clause to cover not only entertainment expenses, which many hon. Members may think constitute the major abuse, to include living expenses. I should have thought that anyone would know from periodical experience that there is considerable abuse in the use of transport—the provision of cars and travelling on what purports to be the firm's business when, in point of fact, it is not at all—on trips and jaunts abroad which are said to be chargeable against business profits,

but which are directed entirely to different things and which render them wholly unjustifiable as expenses to be set against profits.
We have, therefore, got over the first and only difficulty raised by the Chancellor when he spoke under the disadvantage of not knowing the full arguments deployed. The Financial Secretary, as I have said, made a careful and painstaking speech. He had full knowledge of the arguments and he has, obviously, given careful consideration to them. In his answer, which may be considered the important answer, he said that there was already at the disposal of the Inland Revenue a considerable measure of power. They could act under the provisions of Section 31 of the Income Tax Act, 1952, or simply disallow a claim for expenses and put the taxpayer to the necessity of proving the expense by appeal to the Special Commissioners. There was already sufficient power, he said, and there was no adequate reason for taking the additional powers which we proposed in the Clause.
I submit that the complete answer to that particular argument is that, on the admission of the Financial Secretary and the Chancellor, the abuse still exists. Supposing the Financial Secretary had been able to tell us that, although it has existed in large measure in past years, it was rapidly becoming much less in size, and that it was hoped by the use of existing powers or methods fairly soon to reduce it to quite negligible proportions, I should have thought that he might quite logically have said that it was unnecessary to seek further powers for the Inland Revenue; but he was not able to assure us of that.
I ask him now if he can give us, apart from general adjectives, some indication of the scope of the abuse. Is it dwindling or is it growing? There is considerable disquiet on the part of many people that, far from dwindling, it is still considerable in extent, and certainly not growing less than it has been. The previous Government also had this problem before them, and we took steps to try to tackle it. We put a Clause into, I think, the 1947 Finance Bill dealing with this kind of trouble—the provision of various amenities not chargeable against expenses for directors and highly-paid executive by companies. Obviously, that


aim has not borne fruition. Maybe, it has achieved a certain extent, but it has not entirely achieved its purpose.
Equally, the previous Government took steps to try to increase the staff available to deal with this particular kind of inquiry designed to ascertain whether the expenses were really properly chargeable or whether they were fraudulently charged against profits. That, no doubt, had a certain amount of effect, but still we find ourselves in 1953, on the admission of the two Ministers who have spoken, faced with this abuse, and the Financial Secretary says that we do not need any further powers.
I respectfully submit that I was perfectly justified in saying, in view of that answer, which was the only answer we have had from the Government Front Bench, that the debate was left in an unsatisfactory state, that it is our bounden duty to revert to the subject, and that the Government should give further consideration to it. If they are able to give us any batter answer, they should give it this afternoon; otherwise, they should seriously consider either accepting this proposal or some other which they think is better.
The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) also addressed himself to this particular Clause last time, and he put his finger on what might well be said to be the serious objection that can be brought against it. He said that a person who is minded to defraud the Revenue in this way will not hesitate to put his name to an affidavit. I quite accept that that is a very serious criticism of the Clause. In making the opening speech in support of the Clause during the Committee stage, I sought to persuade the Committee that there was that point of view and that criticism to be made against it, but that, nevertheless, the Clause had advantages which outweighed that criticism, and I put the case on that point in this way.
I said that it is all very well saying that the taxpayer had to sign a declaration, but that the mere signing of a declaration might be regarded by taxpayers who are dishonestly minded as an ordinary routine matter which does not bring them up with a jerk and which they take in their stride, but it is a very different thing—and I put this to the noble Lord, who may agree or disagree with

me, though this is the answer to him—once a man has made his return, and made it in the knowledge that he has fraudulently and criminally purported to have incurred expenses against profits which he knew perfectly well could not be justified for a second if there was an investigation, the situation becomes very different.
It is a very different thing if a man makes a return in the knowledge that he can be called upon by an inspector to sign an affidavit swearing that those expenses were legitimate. I hope the House will bear in mind that taxpayers who, I imagine, would be asked to sign that affidavit, knowing that, by being asked to do so, they were obviously suspected, might have sent in the return and might have forgotten all about it. Suppose, then, that such a man received a formal request asking him to sign an affidavit declaring the expenses as legitimate, he would find himself in an alarming situation.
I see the noble Lord's point, but I put it to him and to the House that it would very much alarm the dishonest person who had made a fraudulent return of that sort if, coming to realise, in fact, that he was suspected, that something had gone wrong, he was then called upon, as it were, to sink himself deeper in the mire by putting his name to an affidavit in the knowledge that, if he did swear a false and perjured affidavit, he would render himself liable to criminal proceedings, which might result in his being sent to prison. I put it to the House—maybe the House will not agree, and it is obviously a matter of opinion either way—that what I have suggested has something in it, and that we advance this Clause in an attempt to bring the House to a discussion of this matter.
I make this suggestion. Maybe it is not the right suggestion; at any rate, it is, we hope, a contribution, and we hope that the Financial Secretary, if he is to deal with the matter, as I hope he will, will agree, in the first place, that we have made out that there is a problem; in the second place, that we have demonstrated by pointing to the existence of the problem that the Financial Secretary does not give an adequate answer when he says that no further powers are needed, because the answer is shown to be inadequate by reason of the fact that the existing powers have not availed to stop that


mischief; and, thirdly, I hope the House will agree that we have put down on the Order Paper a Clause which, at any rate, requires serious thought for the reasons I have given.
It is an alarming thing that a man may be called upon to bind himself by signing an affidavit in the knowledge that, if anybody does investigate the matter, he will obviously be exposed as a person who is defrauding the Revenue, with all the consequences which that will involve. I would add that the new Clause is extremely simple as a piece of mechanism. It is not inquisitorial, and it does not involve giving any further power than exist under Section 31. We made that suggestion last year, and the Government rejected it. It does not go further in the direction of enabling any public official to search into private records and accounts. It is not something which would weigh in any way upon the honest taxpayer, and which would be used against him.
The person who is not suspected would not have to sign the affidavit. The innocent, and the vast body of taxpayers, would not even notice it and would not feel that any inconvenience had been put upon them, but, when the Inland Revenue feel that they have to deal with a person who is a rascal and a fraud, it would put in their hands a simple mechanism which does not involve any administrative difficulties and complications. He would be in the embarrassing and frightening position of having to withdraw the claim for expenses, thereby convicting himself of a degree of dishonesty, or swearing the affidavit in the knowledge that he was thereby placing himself in what might turn out to be a really dangerous situation.
There is something in that argument. I ask the Financial Secretary to consider the matter again to see whether, having heard the further arguments—the objections which the Chancellor raised to the scope of the Clause being now removed—he can accept it or undertake to put something better in its place.

4.0 p.m.

Viscount Hinchingbrooke: We had a fairly lighthearted discussion about this new Clause the other evening during the Committee stage, and some charges, perhaps not very earnestly

intended, were levelled against me by the right hon. Member for Leeds, South (Mr. Gaitskell), to which I will refer in a moment. But I think that the discussion this afternoon is probably intended by the right hon. and learned Member for Neepsend (Sir F. Soskice) to be in serious vein, and, therefore, I intend to follow him in that spirit.
Of course, if we wanted to make fun, we could point to the extraordinarily abstruse wording of the Clause, to the fact that it opens with a conditional tense, that the main substantive is in line 5, that the main verb is in line 14 and the object in lines 17 and 22. It is not easy reading, and I doubt if there are many hon. Members who on reading it will fully understand what it is all about. In a way, that illustrates the theme on which I want to speak for a short while this afternoon.
Here is a case of indulging in such abstruseness of legislation that it becomes almost incomprehensible to the layman, and, indeed, quite incomprehensible to the victim. Perhaps that is the object of some Socialist legislation, that they should pursue their victims with weapons which they are incapable of comprehending so that they will be more easily apprehended. The right hon. and learned Gentleman is nothing if not persistent in this matter. His Clause in the Committee was in very much the same terms. It was turned down by the Committee then, and I am a little surprised that, the principle having been turned down by the Committee, it should be brought up again.

Sir F. Soskice: Is the noble Lord now endeavouring to give us a specimen of his serious or his humorous contribution?

Viscount Hinchingbrooke: A little passing humour before I carry out my intention of being serious on the point.
I am a little surprised that the Clause should be brought up again in face of the Committee's clear decision only a week or two ago. But the Clause and the intentions of the right hon. and learned Gentleman and of his hon. Friends behind him clearly demonstrate the attitude of reforming zeal of the Labour Party, their puritanical drive towards absolute goodness in the individual. They have been trying for years past, and are even trying today, after having been defeated in the country, to make people good by statute. The more I think of it, the more


convinced I am that we have seen nothing like it in this country since the time of Oliver Cromwell.
Right hon. and hon. Members opposite are trying to close loopholes in the law. I was accused the other night by the right hon. Member for Leeds, South of not wishing to do so, and the atmosphere he sought to generate was that we on this side of the House are in favour of people defeating the law. Our attitude in this matter is exactly on all fours with that of the learned judge who correctly said, and for all time, that a man or a woman is entitled to arrange his or her financial affairs so as to attract the least possible taxation. There is nothing whatever offensive or immoral in that attitude.
We on this side of the House, particularly in view of the stress that has resulted from six years of Socialist legislation, are more anxious than ever before to stand upon that line. The right hon. and learned Gentleman thinks that by this Clause he will defeat the purposes of individuals—directors of companies, secretaries and commercial men and women—who are trying to earn their living and to make profits for their concerns, and who, at the same time, incur some entertainment expenses. The right hon. and learned Gentleman wants to make sure that at no time shall they get away with too much luxury living or pursue any part of their business in circumstances of enjoyment, which the Socialist theory and practice think are objectionable.
I believe that when legislation is taken to those lengths, and the lengths to which this Clause would like to take it this afternoon, it not only produces profound distress among the people proceeded against, which may result in lower productivity for their concerns, and thus for the country, but it also has a terrible effect upon their natures. Once one breaks through the average natural code of conduct and morality of the ordinary commercially-minded man and woman, they lose respect for the law and for the prosecutors of the law, and when they begin to lose respect for them, they will proceed to every sort and kind of device that they know how to work up in order to defeat them.

Mr. G. R. Mitchison: Mr. G. R. Mitchison (Kettering)rose—

Viscount Hinchingbrooke: No, I cannot give way to the hon. and learned Gentleman.
The more one closes the loopholes in the law, which has become an ass, and a complete ass as this one would, the more people will be turned away from their normal healthy occupations in search of devices and techniques in order to overcome it. They will tend to have no respect whatever for the Commissioner of Inland Revenue, and they will resort to every device they can think of to defeat him, and ways of doing this, which, before the war, would have seemed to them to be quite disagreeable and not to be suggested for one moment, will come into their minds and be accepted and used.

Mr. Mitchison: May I now ask the noble Lord to give way?

Viscount Hinchingbrooke: No, I cannot give way. We were asked to be serious, and I intend to be. If hon. Members do not like me in an amusing vein, they can stomach me in a serious vein.
The right hon. and learned Gentleman is up against very clever people who are always one jump ahead of the Inland Revenue. The more they are chased year by year by legislation of a Socialist character in the Finance Bill, the more they will be encouraged to rush into all avenues and labyrinths into which they would never have thought of going before. It is not a case of closing loopholes in the law; it is a case of reversing the trend of the law and of bringing it back to the general level, to the accepted code and conduct of business morality in the world.

Mr. Mitchison: I am much obliged to the noble Lord for giving way. I wonder whether I followed his argument aright. Does it mean that he has no particular objection to a man who makes, and who is obliged to make, a false declaration, but that he regards it as monstrous and iniquitous supervision if he is called upon to swear to it?

Viscount Hinchingbrooke: I do not see any point in repeating that. I do not believe that people who indulge in this sort of practice, and who were driven to it by the kind of legislation which we have had for the last six years, are the sort of people who will cavil at swearing


an affidavit before the surveyor of taxes. Once they have got that degree of disrespect for the law, they will go to further lengths in disrespect of the law.
Everybody recognises today that some of these practices are going on. Why are they going on? Why has history shown that every time a Government assumes forms of bureaucratic tyranny the people respond in their disrespect for the law, and engage in all sorts of practices that lower the level of morality of the whole nation? It has happened in countries that have been conquered and misruled, and it will happen in this country if we continue to be misruled in this way.
Therefore, my plea with my hon. Friend who may reply to the debate on the proposed new Clause is this: recognise that the law in this matter has become an ass and reject the Clause moved by the right hon. and learned Gentleman. Go further than that next year, if the Government will be so good, and repeal the inquisitorial Sections of the Socialist Finance Acts of 1947 and 1948.

Sir Richard Acland: I join with my colleagues in the House in believing that we have heard an extraordinary statement of business and political morality which is very typical of the mind of very large sections of the Conservative Party. I wish I could have the reflection just to consider how I could bring home to the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) the enormity of what he is saying.
He is saying that the business community, with its important backing, has a code of what the noble Lord calls "morality," by which certain things should be done. If the community respect the businessman's idea of his own businessman's code of what ought to be, so that, in the words of the noble Lord, the businessmen are allowed to make profits for their concerns in agreeable circumstances, then the businessman will play ball even though that may mean, incidentally, that the community cannot raise enough money in taxation to tackle, for example, slum schools in which fellow human beings of the businessman are not given fair opportunities for life.
For all manner of social purposes taxation needs to be increased, but if this taxation presses upon what the business

community conceive to be the proper code of conduct that ought to be allowed to them, then, in the noble Lord's opinion, they are entitled to dodge, to twist and turn and to apply all manner of devices, including, as the noble Lord's opposition to the proposed new Clause shows, the device of entering up their expenses as, shall we say, £250, when, in fact, the expenses under the particular item were only £50. It is the opinion of the noble Lord that they ought to be allowed to get away with that if, according to their business code, they would not have enough means of enjoyment.

Viscount Hinchingbrooke: I said that we should repeal the Acts which resulted in this position.

Sir R. Acland: In other words, if the business community are not able to enjoy themselves as they think they ought to be allowed to enjoy themselves, the community ought either to repeal the taxation which is necessary to tackle such a problem as slum schools, or they ought to open to the business community such avenues for dodging taxation as will make it perfectly easy for the business community to dodge; or else, if we do not open ways for the business community to dodge, we should not take any action at all to see that they do not dodge.
I am sorry not to be able to bring home to the noble Lord more clearly than I have done on the spur of the moment the real meaning of what he is saying. It appears to me a quite intolerable conception of the relation between the community, the business community and the immense number of tasks which the modern community has to perform. Following speakers may be able more sharply to show what I feel so intensely about what has been said. I am not able to express it as sharply as I would like.
4.15 p.m.
I should like to come back to the detailed discussion which was opened by my right hon. and learned Friend, in moving the proposed Clause, of the arguments which were raised in the very full speech which the Financial Secretary made when this matter was discussed during the Committee stage. I particularly want to draw the attention of the Financial Secretary to his own speech, where he was saying what conditions there would have to be for a successful proposal of this


nature. He said that it would have to be shown
that this particular proposal, in fact, will make a substantial contribution towards dealing with those abuses."—[OFFICIAL REPORT. 23rd June, 1953; Vol. 516, c. 1837.]
In my view, the word in that sentence which goes just a little bit far is "substantial."
I invite the Financial Secretary to say whether it would not be equally important to make a modest but noticeable contribution to dealing with the abuse. If there is an abuse, which I think the Financial Secretary and his hon. Friends, other than the noble Lord and perhaps one or two others, admit, and if a proposal will make, not a substantial but a noticeable contribution, towards eliminating it, the proposal ought to be adopted.
My argument is that the new Clause would do exactly that. When we were discussing a somewhat similar proposal moved by my hon. Friend the Member for Sowerby (Mr. Houghton) I said that what most of us do, when an issue of right or wrong is in front of us, is to be silently influenced by our opinion of what might happen to us if we did wrong. I instanced the case of a railway ticket, and said that all of us would agree that people who travel on railway trains ought to pay their fares but that for many of us the decisive question whether to pay or not to pay was influenced to some extent by the presence of a ticket collector.
In the same way I ask what happens to those of us who fill up Income Tax forms. The filling up is immediately influenced by what we think might happen to us if we did something wrong. I am not concerned with either of the two extremes: scrupulous and purely mechanical honesty in filling up of Income Tax forms by one who will not be affected one way or the other way by this new Clause; and the resolutely fraudulent person—this is one point on which I agree with the noble Lord—who, in filling up an Income Tax form, will not be very much affected by the proposed Clause either.
I am concerned with those among us who are just a trifle slap-happy in filling up the parts of the Income Tax forms which deal with the expenses account. Here it is relevant to ask what is to happen to the man who makes a mild exaggeration in his expenses? There are two alternatives. Under the present

arrangements the worst that can happen is that he gets a letter from the Income Tax authorities disallowing a certain item in his return. When he gets that disallowance all that he has to do is to decide whether he is really in a strong position to argue or whether he should accept the disallowance. Nothing adverse really happens, nothing that in any way hurts happens to the slap-happy filler-up of Income Tax forms if he puts against a certain item of expenditure the figure of £200 when the figure of £100 would have to be more accurate.

Mr. Arthur Colegate: I am not clear whether the hon. Baronet has in mind Members of Parliament. Are they, in future, to swear an affidavit about their expenditure on Parliamentary service?

Sir R. Acland: I do not think that they should be or that they are at present in a different position under the law. Indeed, it would be fantastic to make a differentiation.
The contrast under this proposed new Clause is that the man who enters up a figure of £250 in expenses, when £50 would have been the more honest figure if he had thought a bit hard about it before putting pen to paper, can receive in due course a request from the Income Tax authorities to put that statement into an affidavit. That seems to me to be, not an intolerable threat of prosecution hanging over his head, but certainly something which, at the time when he is filling up an Income Tax form, will call his attention to the need for really careful accuracy and will lead him not to put into his declaration of expenses any figure which he believes he could not substantiate in an affidavit, with all that that means, if called upon to do so.
I do not say that this new Clause will revolutionise the present state of affairs, but I say that it will make not necessarily a substantial but a modest and noticeable contribution, and I hope that the Financial Secretary to the Treasury will accept this slight alteration in his own criterion of judgment in these affairs.

Sir William Darling: This new Clause is to me, at any rate, a very unpleasant and nauseating proposal. The fact that it is in the name of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell)


and that the noble Baronet the Member for Gravesend (Sir R. Acland) has supported it makes it even more repugnant. I can think of nothing more nauseating—and I can think of no other word—because it shows, and the hon. Member for Sowerby (Mr. Houghton) will support me, complete lack of respect for the efficiency and competence of Inland Revenue officials. It may be that the hon. Baronet and other hon. Members opposite have fewer contacts with these officials than some of us and that may account for the innocent way in which they so often speak of the practices of the Inland Revenue.
The Inland Revenue official who handles this business is called the surveyor or inspector, and those words mean something. If, in my capacity as trader, merchant or Member of Parliament I submit my expenses on a particular enterprise it is that official's business to inspect or survey the expenses. He is entitled to say that they are improper or excessive and, if I may inform you, Mr. Speaker, he does say so with very great frequency.
I hasten to remind the noble Baronet not to attempt, in his present state of Puritanical innocence, the suggested frauds that he is contemplating. I advise him to leave them to the hard-faced men who are more experienced in them. The whole question of expenses is a mania, an obsession and a phobia of hon. and right hon. Members opposite. They think that their fellow-creatures are doing a little better than they are, and so they have this elaborate machinery to investigate and to see that they do not get away with anything.
Expenses are the tool of one's trade. No one willingly incurs the expense and trouble of entertaining someone to dinner. Nobody with any experience, who does it for the purpose of promoting business, entertains anybody to dinner with a great degree of pleasure. I would sooner have a business conversation with the hon. Member for Gravesend over a bare office table for half an hour than have the doubtful pleasure of spending more than one and a half hours over dinner and have him share half a bottle of Burgundy before he could understand what I was talking about.

This new Clause is born of simplicity and ignorance joined with envy on the

part of hon. Members opposite. They think that somebody is getting away with something. I have the support of the Chancellor of the Exchequer, and, I hope, of the hon. Member for Sowerby, when I assure the House that the taxation organisation of this country is no doubt the most efficient in the world.

Once, in conversation with me, Lord Waverley said that he was sent to France in 1917–18 as an official of the Treasury to advise the French on how to raise money to conduct the war. He found that the French were impressed not by the gallantry of British troops but by the gallantry of the British taxpayer. While the French were willing to put thousands more men in the field they did not think that they had an efficient organisation which would enable them to emulate the British and have a taxation system in effective and universal use in the field.

It is a mark of the unreality of the world in which hon. Members opposite live that they think that we are people who are not adequately taxed. If they thought that we were adequately taxed they could not bring forward a preposterous idea like this. Persons like myself—and I look upon myself as an average person, of distinction—will not be deterred if this new Clause is carried into law. I should feel that it was a challenge to the nimbleness of my wits and to my skill. As my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) said, one is always a step ahead of the tax collector. This Clause would encourage me to acquire even an additional nimbleness.

Mr. Frank Bowles: Does the hon. Member mean that if this Clause were embodied in the Finance Bill this year and became the law he might not get away with what he is getting away with now?

Sir W. Darling: The suggestion is that I am getting away with something. It shows how deeply ingrained in the minds of hon. Members opposite is the idea that somebody is doing a little better than they are, that they are a little keener and are getting their hands on something. A mixture of the police State and the Puritan is the context.
I am not getting away with anything. I have never got away with anything. I have not even tried. But if I were asked


to sign an affidavit I should not hesitate. I should say that I am entitled to put before the inspector that the expenses were lawfully and properly expended for the purpose of promoting my business, and if he thinks that they were improper it is his business and duty to tell me so. I may disagree but he, unless I appeal, has the last word. The country is very well looked after in this matter.
4.30 p.m.
I suppose you are aware, Mr. Speaker, though some hon. and right hon. Gentlemen may not be, that chartered accountants are in a specially privileged position. I happen to be the director of one or two companies. As a director I am not entitled to any expenses for attending the meetings of the companies. I travel at my own expense. If the meeting is in Edinburgh I have to go there. If it is in Taunton or London I have to go there. No expenses are allowed to a director travelling to undertake his duties as director of a company.
But there are two exceptions. The right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) must be aware of one of them. The directors of a public company who are entitled to have their expenses paid when attending the meetings of the company are lawyers and chartered accountants. These two henchmen of the Inland Revenue are so clearly recognised in their eyes that they are placed in this peculiarly privileged position.
This special pleading is being put forward by the Opposition. Excessive expenses are a restrictive practice. They add to the costs of business. Are hon. and right hon. Gentlemen opposite prepared to attack other restrictive practices in the same way? Let them take the mote out of their own eye before they look for the beam in that of their brethren. I hope that that remark is sufficiently theological to appeal to the hon. Member for Gravesend.
This is a very much misunderstood subject. I should like the hon. Member for Sowerby to tell some of his friends. He is fully informed in this matter. I happen to be connected with a company which runs a canteen. The 1,500 employees who use the canteen pay 8d. or 10d. for their meal. If I choose to have a meal in the canteen I have to pay

4s. 8d. There are advantages in being a mere proletarian. There are many disadvantages in conducting business on the higher level.
It is not wise for the Opposition to behave in this fashion. What is wrong with the country is that it has too few persons of ability. Many people have acquired positions of importance by luck. Removing them from the category, it is persons of ability that we want in increasing numbers. That is the only way in which a population of 50 million will be able to survive in this difficult world. This persecution of persons of ability, persons who show marked and obvious signs of success, is a foolish way which, if persisted in, will be detrimental to the best interests of us all.

Mr. Frederick Mulley: I am strongly tempted to follow the hon. Member for Edinburgh, South (Sir W. Darling) in all the various facets of this subject, but I will confine myself to two. The fact that the hon. Member finds entertaining people so unpleasant is surely an argument for discouraging people from having entertainment expenses. That would give him a more pleasant time.

Sir W. Darling: I may find it unpleasant but I do not want to sign an affidavit about it.

Mr. Mulley: That may or may not be the case, but the hon. Gentleman put his finger on the heart of the problem. He referred to what he had been told by Lord Waverley about the French admiration for our taxation system. The French rightly admire our ability and willingness to pay taxes; but if the expenses aspect of taxation gets out of hand it is likely that our own taxation standards will follow those of the French, with dire consequences.
Before we go further we ought to clear up the judicial heresies of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). He said that a learned judge had said that any person is entitled to arrange his financial affairs so as to attract the smallest amount of taxation. With that no one will cavil; but this is not a court of law. We are not here to interpret the law. Our function is to make and amend the law. If we feel that there is something wrong with the law it is up to us to try to put it right.
As the noble Lord is clearly interested in legalistic aspects, I commend to him the rule of law formulated by Professor Dicey. The great point about the rule of law is that in this country we should all be equal before the law. I submit that it is equally important that we should all be equal before the tax gatherer—before the Inland Revenue. Our great complaint in the matter of expenses is that there are great discrepancies in the administration of the same law. It is purely to try to put right those discrepancies that we submit this new Clause.

Mr. Gerald Nabarro: Will the hon. Gentleman tell us exactly what is wrong with the existing law which is to be found in Section 31 of the Income Tax Act, 1952? That is a long and complex Section. Will he tell us exactly what is wrong with the state of the law?

Mr. Mulley: The hon. Gentleman must allow me two or three minutes before I develop my main case. I hope to convince him before I conclude. I certainly think that there is something wrong, at any rate in the mind of the public it appears so, as between the expenses that certain taxpayers are allowed to claim and the inability of other taxpayers to claim similar expenses. For the benefit of the hon. Member for Kidderminster (Mr. Nabarro) I would say that this arises because of the distinction between Schedule D and Schedule E.
I should like to illustrate the point by a comment made by the noble Lord on a previous occasion about the desirability of persons conducting their business in agreeable surroundings. We agree that that should be done wherever possible. The position in law is that it is possible for two businessmen to meet in a convivial atmosphere at the expense of their company and the Inland Revenue. But it is not possible for two steelworkers who happen to meet at nine o'clock at night on the way to the night shift to discuss over a glass of beer, either at the expense of the company or the Inland Revenue, how to conduct the important operation of making steel. They can make no such charge for conducting their business in a convivial atmosphere. That is the point I am trying to make. There

is a lack of equality between different classes of taxpayer before the Inland Revenue.

Mr. Colegate: The hon. Member must recognise that very large sums are spent by trade union officials and others such as steelworkers. I constantly see them coming up to conferences in London and elsewhere, and I am certain that their expenses are set off against income.

Mr. Mulley: The hon. Gentleman is trying to introduce another red herring. I was not talking about people going to conferences. My hon. Friend the Member for Sowerby (Mr. Houghton) gave a long explanation of subsistence allowances yesterday. I am sorry that the hon. Member was not here at the time.
I am talking about people discussing their work of making steel. There is no provision for them to do that in convivial surroundings. The expenses which they often voluntarily incur for this purpose must be borne out of their own pockets and not out of the pockets of the company or the Inland Revenue.

Viscount Hinchingbrooke: I am on the side of the miners, being also unable to take part in any business discussions and to charge entertainment expenses.

Mr. Mulley: The noble Lord seems, at any rate, to be changing his views a little, so this debate has served some purpose even if we do not get any further.
The hon. Member for Kidderminster asked what is wrong with the present law, and I will tell him shortly. It is that under Schedule D all one needs to do is to show that the expenses are wholly and exclusively laid out or expended, whereas under Schedule E, which applies to Members of Parliament—this will interest the hon. Member for Burton (Mr. Colegate) who expressed some apprehension on this point—expenses must not only be shown to have been wholly and exclusively incurred but necessarily incurred as well.

Mr. Nabarro: Surely Section 31 of the Income Tax Act, 1952, applies with equal force both to Schedule D and Schedule E?

Mr. Mulley: I think the hon. Gentleman will appreciate that there is that important difference between Schedule D and Schedule E. However, it would be


out of order in discussing this important Clause to roam over the whole Income Tax Act, 1952.
We may be asked why, instead of moving the new Clause, we do not move to amend the law relating to Schedule D and Schedule E. The answer is that we cannot. Under the Standing Orders of this House no one except a Minister of the Crown is able to put forward any Amendment which might possibly incur a charge or raise the taxation responsibility of any person. Therefore, it is quite impossible for us to approach the matter from that angle.
Really, despite all the dust that this battle has thrown up, the suggestion that we are making is very simple. We are not, as the hon. Member for Edinburgh, South (Sir W. Darling) thought, throwing doubt on the efficiency of the Inland Revenue. We are providing them with just one additional simple weapon to use.

Sir W. Darling: They have got plenty.

Mr. Mulley: The hon. Gentleman seems to think they have too many already, but there is some doubt whether or not they have all the powers that they require to deal with this point. That is what we are doing, because as an Opposition that is all we can do. If we wanted to change the law it would mean that some people would pay more tax than they have to pay, and that would be out of order.
We on this side of the House, including my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), take a much higher view of the ethics of business than hon. Members opposite. We do not think that the great majority of people with expense accounts are defrauding the Revenue; nor do we think that a great body of people who do have excessive expense accounts would be prepared to sign affidavits in respect of false figures. We believe that the morality of businessmen is as high as that of any other section of the community.
It is surprising that we on this side of the House have had to defend the business and managerial classes on two consecutive days. Yesterday we had to defend them on a Clause about earned income relief, when it was suggested that these people were not working as hard as they should because they had to pay too much tax. We resented that suggestion being

applied to all people in the category of those entitled to have expense accounts, although, no doubt, some of that sort of thing does exist.
Much more important, I think, is that there should appear to be an equality before the Inland Revenue in the same way as we demand equality of persons before the law. As Members of Parliament, we should not want to put ourselves in any special position compared with the ordinary citizen from the point of view of taxation. There is undoubtedly in the minds of all people who are subject to P.A.Y.E. the feeling that they are in a much inferior position in this respect compared with those who have expense accounts. Consequently, we are bound, in fairness, and in order to sustain the very high standard of Income Tax honesty in this country, to try to ensure not only that people are equal before the law but that they are thought to be so, which is very important.
4.45 p.m.
The other point of some substance that the noble Lord raised relates to the evils of high taxation. Undoubtedly, it is true that the higher the taxation, the greater the incentive to evade or avoid that taxation. But surely the noble Lord would not suggest that a privileged few, because of their occupations, should be able to avoid high taxation and in that way make the taxation even higher for those who have no means of avoiding it. We may argue about the merits of taxation; we may differ in our views about the advantages or otherwise of a high rate of taxation, but that does not arise in this case.
It may be that if Income Tax was a quarter its present rate the need for this Clause or for expense accounts would be much less, but the noble Lord should realise that in the year 1953 even his own Government can hold out no hope of reducing taxation to that extent. High taxation, for good or ill, is likely to be with us for some time, no matter which party is in power. Consequently we have to be ready to face this situation.
Our contention is that whether high taxation is good or bad, it should be equally borne according to the law of the land. That is all that we are putting forward in this new Clause. It is a very reasonable proposal and it does not need to give rise to all the suggestions of horror on the benches opposite. As my


right hon. Friend said, in moving the new Clause, we are not directing any wholesale condemnation on managerial or business people who happen to have expense accounts. We say that there are abuses, and that in the interests of all it is desirable that the maximum possible means of putting them right should be at the disposal of the Inland Revenue. Therefore, I say that this proposal contains an incentive effect.
I quoted to the House yesterday what an American told me about the efficiency of British managerial and business people. He said, "Your lower ranks and the middle hierarchy are very good and efficient on the whole, but they are working hard for one purpose only, and that is to attain the status of an expense account. When they acquire that status they spend far too much time"—I think the hon. Member for Edinburgh, South will agree with this—"entertaining each other, with the result that their efficiency and drive are very largely dissipated."
I think that to amend the law relating to expense accounts would remove the misery which is experienced by some people, according to the hon. Member for Edinburgh, South, and it would also have the advantage of increasing the return to the Inland Revenue. It would have the additional advantage of making the Income Tax law appear fairer to all those who have to pay tax, and it might well have some advantages in promoting greater efficiency and incentive among managerial and business classes.
I therefore commend the new Clause to the Financial Secretary. I ask him not to claim to be tied down by this particular legalistic form, for I am sure he realises as well as we do that we are bound to put our proposal in this form because of Standing Orders. I trust that if he thinks there is some substance in this argument he will give some undertaking about the future.

Mr. Douglas Houghton: Hon. Members opposite have been behaving as if they were in the dock. Their speeches are a mixture of a defence of their innocence and confessions of their guilt. We have also had from the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) a distressing description of the psychology of the

criminal, and from the hon. Member for Edinburgh, South (Sir W. Darling) we had the distressing suggestion that if this Clause were passed it would turn him from an honest man into an artful dodger.

Sir W. Darling: It would sharpen my already nimble wits.

Mr. Houghton: The hon. Gentleman says, on the assertion that he made a little while ago, that his nimble wits have been used so far not to cheat the Inland Revenue, but he says, "I cannot be accountable for my actions if you pass this Clause." The whole country had better gather round this trial of the hon. Members opposite, to act as a grand jury and give its verdict upon their fiscal and personal morality.
Hon. Members opposite are doing themselves an injustice. The truth is that although there are abuses of the Income Tax law which we, on these benches, quite sincerely describe as widespread, they are not universal. This proposal merely seeks to protect the majority of the honest taxpayers from the depredations of the dishonest—or, shall we say, the less conscientious—taxpayers. It has nothing to do with the doctrine of trying to make people good by statute. The Income Tax Acts have been trying for 100 years to make people honest by statute, because there are many Sections in the present Act which were there from the very beginning and which impose penalties for those who do not conform to the requirements of the Income Tax law.
Nor has this Clause anything to do with the doctrine of the right of the citizen so to arrange his affairs as to attract the smallest amount of taxation. This new Clause does not rule out any concession already given; it does not bring into taxable liability anything which is already outside it, and it does not alter the law of taxation. All it does is to strengthen the hands of the Inland Revenue authorities in calling for certain information.
In passing, I might say, to my hon. Friend the Member for Sheffield, Park (Mr. Mulley), that the Americans have nothing to teach us about direct taxation. We can modestly claim that our system of direct taxation is the most efficient in the world. There are many countries in which no system of Income Tax could be introduced, because it would not work. There


are other countries where there are systems of Income Tax which do not work, and there are still other countries, including the United States, where the systems of Income Tax do not work as well as they should. But that does not mean that when we have preened ourselves with having the best Income Tax system in the world we should not try to make it better, more efficient, and more of an example for the rest of the world.
There is another important thing which should be said, and I say it to the noble Lord the Member for Dorset, South. In this country we have taxation by general consent, and we have an Income Tax by general consent. Were there any widespread resistance to the Income Tax we have it would cease to work. It is because the great majority of our taxpayers are honest and straighforward that we are able to propose the imposition of even further penalties or further exactions upon those who may wish to cheat the rest, or evade their responsibilities in some way or other.
The crux of this new Clause is simply to try to tighten up, under existing circumstances, a tendency for those in a position to do so to secure tax-free payments, tax-free amenities or tax-free services, where they can get them.

Sir W. Darling: Which are legal.

Mr. Houghton: Which, if they concern expenditure incurred wholly and exclusively in the pursuance of one's trade, are properly deductible from profits for taxation purposes.
The real problem is that on the margin of this expenditure, which is a very vast expenditure in total, there is this desire of a number of people to secure these tax-free amenities and services for private or semi-private purposes. That is what we are after. Under present conditions, those who are wholly dependent on cash remuneration are clearly at the mercy of the Inland Revenue and have to pay their full due on their remuneration, bonuses and other cash payments, but among those people who are directors of companies, directors in control of companies, or in other positions where they have control over expenditure, there is the temptation to use what services are at their disposal for private as well as business reasons.
That temptation springs from the fact that we have what hon. Members opposite would no doubt call the "unholy trinity" of high taxation, high prices and high profits. I do not know whether they would denounce the last of these, but they are frequently denouncing the first. I throw out a challenge to those hon. Members opposite who talk loosely about reducing taxation, or regard the evils of high taxation as merely a temporary phase and a legacy from Socialist Governments, which Her Majesty's present Government are in rapid course of clearing up. The whole of the proceeds from Income Tax in this financial year will go to meet the cost of defence. That is a measure of the defence programme. While defence is swallowing up the whole proceeds from Income Tax there can obviously be no suggestion of reducing the level of taxation.

The Chancellor of the Exchequer (Mr. R. A. Butler): On a point of order. Is it in order to discuss, on this new Clause, the whole level of taxation? If so, the debate may go on for ever, and we shall not finish the business today.

Mr. Deputy-Speaker (Sir Charles MacAndrew): I thought the hon. Member was going rather wide of the mark, but I thought he was also coming to an end.

Mr. Houghton: I was merely dealing with points raised by hon. Members opposite in the earlier part of the debate, in the course of which all these matters were referred to. I shall certainly cut my remarks short in the interests of business. I understand that we have said we will co-operate in bringing the business to an end at the expected time, and I have no desire to make any difficulties about doing so, but it seems desirable that, after listening to the speeches we have had earlier in this debate, some of the points made by hon. Members opposite should be answered.
I was dealing with the purpose of this Clause and I had pointed out that it does not alter the level of taxation. It merely deals with the power of the Inland Revenue to call for information. I know that some hon. Members think that the Inland Revenue work under a text which


might be taken from "Antony and Cleopatra":
Thou shalt be whipp'd with wire, and stew'd in brine.
Smarting in ling'ring pickle.
The truth is that the Inland Revenue have not yet got the powers necessary to secure the proper observance of the Income Tax laws.
The hon. Member for Kidderminster (Mr. Nabarro) has asked, on two occasions, what is wrong with Section 31 of the Income Tax Act, 1952. What is wrong with it is that it is not readily at the disposal of the local inspector of taxes. He has to get the authority of the Board of Inland Revenue before he can exercise the powers provided in it.

Mr. Nabarro: Is the hon. Member suggesting that the local inspectors of taxes are showing some deficiency in executing their duties and in not observing the requirements of the existing statute? Is he maligning his own profession?

5.0 p.m.

Mr. Houghton: The hon. Member must not misrepresent what I have said in that way. What I am saying is that those powers were reserved to the Commissioners of Inland Revenue. When that is done it is quite clear that the intention is to use them with great circumspection and moderation. A year ago I sought, during the Committee stage of the Finance Bill, to have these powers put into the hands of local inspectors of taxes, but the Chancellor of the Exchequer considered that unnecessary. The weakness of Section 31, therefore, is that the powers can be used only when a submission has been made to the Commissioners of Inland Revenue and a decision taken to use them.

Mr. Colegate: The hon. Gentleman has said what I have found myself—that the inspectors use these powers with circumspection and moderation. Is he arguing that if we accept the new Clause and alter Section 31, they would not use their powers with circumspection?

Mr. Houghton: What I am saying is that the new Clause puts additional strength into the powers which the Inland Revenue already have. It takes this simple form—of calling for information rendered in the traditional, solemn

way of an affidavit. The new Clause does not give the Inland Revenue power to call for any more information than that for which they already have power to call. What it does is to introduce this new note of gravity and solemnity into the method of rendering this information when called upon to do so by the Inland Revenue.
It is a very narrow point when one comes to look at it in the text of the powers of the Inland Revenue, but, for a variety of reasons, we have had to concentrate on this method of bringing to the attention of the House some of the defects in existing arrangements and the need to strengthen them. In their heart of hearts, hon. Members opposite know that on the fringe of this vast expenditure on travelling, entertainment and amenities of various kinds, there is the use for private and semi-private purposes of some of the services available. It is an evasion of Income Tax if they are not regarded as part of the cash remuneration of the recipient and taxed in the normal way.
If they are not taxed in the normal way it is possible, by this device, to have a standard of living higher than that of another member of the community who is on the same level of cash payment. That point is obvious to us all. This Clause seeks to strengthen the hands of the Inland Revenue in sorting out that type of expenditure from that which is legitimately incurred solely and exclusively in the pursuance of business. There is nothing revolutionary about it. It would be a salutary thing to many people if they were required to render information in this way. It would bring their minds to the seriousness of what they are doing and, in my opinion, for what it is worth, it would lead to a straightening out of many abuses which now exist and would establish a more satisfactory relationship between the Inland Revenue and the taxpayer in this field.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): The House will recall that last night the Chancellor of the Exchequer accepted a suggestion from the benches opposite that discussion on the Bill should be adjourned at a point which enabled this Clause to be taken first today. The House will also recall that assurances were given that that course would not prevent us


from concluding the business at a reasonable time. Now that we have had about one and a half hour's debate on the new Clause, I hope that the House may be prepared to come to a conclusion upon it.
I express that hope with all the more confidence when I recall that substantially this topic was discussed during the Committee stage, in a debate which, as reported, occupies some 31 columns of HANSARD; and that it was also discussed in Committee last year. I think I can, therefore, say that on those occasions and today it has been exhaustively if not exhaustingly discussed. That is so much so that the problem which faces any of us who take part in the debate is to think of something new to say. Even the right hon. and learned Member for Sheffield, Neepsend (Sir F. Soskice), for all his great forensic abilities, did not appear to me wholly to get over the difficulty.
As he told us, this new Clause differs only from that discussed in Committee by reason of the fact that the affidavit procedure prescribed in it is made to apply not, as in the Committee version, solely to expenses in connection with entertainment, but is broadened to cover expenses incurred in connection with travel, living, and so on. Indeed, the right hon. and learned Gentleman confided to us that this new version was evolved largely to meet a point raised by the Chancellor of the Exchequer in his speech on the last occasion. The right hon. and learned Gentleman made it perfectly clear, as did those who followed him in the debate, that the widening of the Clause was designed for that purpose, that they themselves do not care very much about the widening and that all they are really concerned about is the original entertainments point.
As I said on the last occasion—and I do not want to weary the House by repeating it—we can, I hope, start on the basis that where it is proposed to arm the executive with additional powers those powers should not be granted unless a perfectly clear case can be made out to show that they are really necessary. We are in this rather unusual position: Her Majesty's Opposition are pressing upon Her Majesty's Government additional powers which Her Majesty's Government, with becoming coyness, are seeking to reject. This expression of confidence in the skill and ability with which these

powers would be used, if conferred, which is implicit in this proposal, is very touching, and I appreciate it deeply, but, on the other hand, it makes it extremely difficult, as a normal constitutional proposition, for this House to insist upon arming the responsible Government of the day with powers which that Government, in the exercise of their responsibility, do not think they need.
It seems to me that if the right hon. and learned Gentleman is to succeed in his cause in those unusual circumstances—that those powers should be forced upon us—it is up to him to establish all three of the following propositions. The first is that there is substantial abuse. I do not know what the case for the Opposition is on that point. During the Committee stage the right hon. and learned Gentleman went out of his way to say that he did not think there was widespread abuse. His hon. Friend the Member for Sowerby (Mr. Houghton) took another view. As I said on the last occasion, while it is not part of my argument that abuses in this sphere, as in other spheres of taxation, do not exist, there is no reason to assume, as some hon. Members appear to have assumed, that the abuse is widespread or large. Further, there is absolutely no evidence that it is increasing—and there I reply to the hon. Baronet the Member for Gravesend (Sir R. Acland).
The second proposition which it seems to me the Opposition must establish is that an alteration not of substantive law but of the legal machinery of enforcement is required to better the position. A good deal of what was said, let me hasten to add not by the right hon. and learned Gentleman but by some of his hon. Friends, was quite immaterial to this rather narrow issue of the legal machinery of enforcement. Its relevance, as I understood it, was much more to the general law as to whether entertainment or travelling expenses should be admissible in any circumstances.
That was the argument. I must point out to those who consciously or subconsciously adopted that attitude that anybody with any experience in this field knows that, in practice, it is necessary for a certain amount of expenditure to be incurred in this direction if further business is to be obtained. Indeed, the Government themselves, by the existence


of the Government Hospitality Fund, recognise that that exists, and, indeed, the scope of that need as shown by the size of the provision made in successive Estimates was, perhaps, even more fully appreciated by the former Administration than it is by the present one. Therefore, I think that we can start on the basis that certain expenses of this kind as a matter of substantive law are, and obviously must be, admissible, and a good deal of the indignation this subject appears capable of perennially generating as to what is really the basic law is really beside the point.
The third proposition which, it seems to me, must be established to justify forcing these powers upon us is that it must be shown that such abuses as exist cannot be dealt with reasonably by ordinary administrative means. With great respect to the argument that has been adduced—and I say in all sincerity that no man puts either a good or a bad case better than the right hon. and learned Gentleman—it does not seem to me that any of those three elementary propositions has been established. It seems to me quite clear that there has been great exaggeration as to the scale of the abuses that exist. It has not, I believe, been demonstrated that what is needed to deal with those that do exist is a tightening up of procedure of this nature. Nor has it been made out, I submit to the House, that such abuses as exist—and I shall say a word about that in a moment—cannot be tackled in another way.
I would hasten to disillusion the hon. Member for Gravesend on one or two points. I was interested in his analysis of the motives which actuate him when he is completing his Income Tax returns. I found them very interesting, but I must point out that the existing law is not quite so simple in this matter as he seems to think, and that if a taxpayer were to include in his return, falsely and fraudulently, a misleading item he would not by any manner of means be able just to apologise and get away with it. The hon. Baronet is under an illusion if he thinks the law is anything like as clumsy in that respect.
I do not want to recapitulate the summary of the existing law that was given during the Committee stage, but it is a fact that a claim can be disallowed

by the inspector and that the taxpayer then has the onus of either accepting the disallowance or appealing to the Commissioners. If he appeals to the Commissioners the onus is on him to make out a claim, and documents can be produced, and, as a final safeguard, there is, as one of my hon. Friends very rightly pointed out, the inquisitorial provision of Section 31 of the Income Tax Act. These, taken together, are considerable legal powers, and no argument that I have heard has demonstrated that those legal powers are inadequate.
There are other ways of dealing with this matter, and I thought that in Committee the hon. Member for Sowerby (Mr. Houghton) was right when he indicated that one of the ways in which the situation could be handled was the way in which it was being tackled, that is, by making more adequate provision for Revenue staffs. I thought the hon. Member was talking very good sense on that subject, a subject on which, as the House knows, he has an authority denied to most of us. Of course, the real safeguard against abuses, if one wants to be realistic about this, is not piling up one legal sanction upon another: it is the good sense, knowledge of their job and application to their duties of the devoted staffs of the Board of Inland Revenue. That is a much more realistic way of approaching this matter.
5.15 p.m.
Simply as an indication of the fact that, whatever hon. Members may say, we are not complacent about this matter I would recall to the House what was pointed out yesterday by my hon. Friend the Member for Altrincham and Sale (Mr. Enroll), that to clarify the position in this respect the Board of Inland Revenue have evolved a new form, I think No. P 11 (D), the purpose of which is to make quite clear to the people concerned the precise legal position of the duties imposed upon them. That is an indication, it seems to me, of the right way to proceed in these matters. I would hasten to say that we are proceeding in this way not only because we are not complacent in the matter, but because we are not alarmists either.
As I have said, there is no evidence that abuses of this sort are growing. Indeed, there has been no evidence adduced to prove that at all. Frankly, I would


say, with respect, that what we have heard to day is largely repetition of gossip. I am advised that there is no evidence of an increase of this sort. That is a very material consideration, because I would say at once that my right hon. Friend has not the faintest intention of conniving in any breaches of the law.
I must deal with one argument that the right hon. and learned Gentleman the Member for Neepsend put. It seemed to me that in this he was falling far below his usual standard of persuasive eloquence. He referred to the fact that I had said at this Box during the Committee stage that there were some abuses, and he said that because there were some abuses that, apparently, was an overwhelming argument for the strengthening of the legal powers. I would remind the right hon. and learned Gentleman and the House that neither in the Income Tax law, nor, indeed, in the criminal law, is 100 per cent. protection against abuse or crime possible.
The penalties for housebreaking are severe and heavy. Housebreaking, nevertheless, occurs. On the right hon. and learned Gentleman's logic, that being so hon. Members ought to be clamouring for an increase in the penalties and in the powers of the police for the apprehension of housebreakers. It is the most fallacious of all arguments to say that because abuses occur, crimes are committed, the law is inadequate. Because in an imperfect world the law on the criminal, civil and revenue sides is from time to time breached, that is no argument that the law itself is inadequate.
I want to say one other thing. I agree very much with what was said by one hon. Member as to the high standard of probity of the average taxpayer in this country. I thought the atmosphere which one or two hon. Members were trying to create, of a sort in which the widespread popping of illegitimate corks was heard on every hand, was a wildly fantastic picture. The British taxpayer, I should have thought—and I must not enter into national comparisons—compared, in his very proper approach to his liability to tax, favourably with those of any other country in the world.

Mr. Mitchison: Will the hon. Gentleman allow me to point out that the instance given by his hon. Friend the Member for Edinburgh, South (Sir W. Darling) was Burgundy, and that it does not pop?

Mr. Boyd-Carpenter: Is the hon. and learned Gentleman unaware of the existence of sparkling Burgundy?

Mr. Mitchison: They do not drink it in Edinburgh.

Mr. Boyd-Carpenter: I must not be led into a dissertation upon the merits of that agreeable and stimulating beverage, but I think it is important from the point of view not so much of this House but of people outside that the impression should not be allowed to get about that there are widespread abuses of this kind. The repercussions of such a wholly fallacious suggestion are, I think, obvious to every hon. Member, and I think it is necessary for us to have this matter in proportion.
As I have said, and I gladly repeat, my right hon. Friend undertook in Committee—and I repeat the undertaking now—that he would never hesitate to-come to the House for additional powers once he was satisfied that such additional powers were really required to deal with abuses. We are not satisfied that these powers are required. I urge upon hon. Members, from their own point of view, that it is perhaps a little undesirable to press so hard and continuously upon us to accept these powers, after this matter has been discussed in Committee this year, in Committee last year and here again and after every argument has been weighed and considered.
If hon. and right hon. Gentlemen opposite insist in pressing upon us powers which my right hon. Friend, in the exercise of his responsibilities to this House for the collection of taxes, does not regard as necessary, then I must say that many people will begin to think that what began as a genuine and sincere attempt to arm the Executive with powers against abuses has degenerated to raising a little prejudice by suggesting, as was done during the course of the debate, that certain sections of the community are allowed to get away with it because an idle and complacent Government will not intervene to stop them.
It is my right hon. Friend who has the responsibility for the collection of taxes, and if he fails in this duty the House can and should call him to account. The fact that he does not feel that those important duties require him to be armed with these additional powers ought to convince reasonable people that it is wrong to force them upon him.

Mr. Douglas Jay: I agree that we should come shortly to a conclusion about the new Clause, though I am bound to add that the conclusion which we think the House should come to is not that recommended by the Financial Secretary. Also, if this debate has been prolonged it has been partly by the speeches—some of them rather curious—and interventions of hon. Members opposite. I think that the speeches of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and of the hon. Member for Edinburgh, South (Sir W. Darling) have proved the necessity for some such measure as we are proposing this afternoon.
The noble Lord in his speech described himself as lighthearted, but I rather thought he was light-headed at times. Both he and the Financial Secretary failed to address themselves to the serious point which is now at issue. It seems to us that the serious point is that there is nothing more vital and more precious in our financial system than the solidity of the tax structure and the general belief in the community that that structure is fair and efficient in respect of all concerned. There have been references to other countries, which I will not follow, but the widespread character of the belief in the fairness of the tax system is something which it is very easy to destroy and very difficult to build up again. We have that belief in a large measure in this country at the present time.
But there are beginning to arise certain doubts and a certain uneasiness on this issue of expenses. In our view, if we are to maintain the integrity of the whole system it is vital to remove those doubts by giving further powers to the Inland Revenue, as we suggest. The real difficulty is that all those who pay Income Tax under P.A.Y.E. are compelled, without question and without argument, to pay the full amount, whatever it is. It also appears to some people—and this is not a matter of prejudice, I would say to the Financial Secretary; it is the duty of the House to see that the taxes are fairly imposed—that those who happen to come under Schedule D are able to obtain in one way or another more favourable treatment. It is not possible, in my view, when one is asked a question at a political meeting, a trade union meeting or elsewhere as to whether Government and

Parliament have done everything possible to stop these practices, to answer with complete honesty that they are on a negligible scale and that everything we can do to stop them has so far been done.
We have been challenged to produce evidence on a material scale that those who pay taxes under Schedule D are able to obtain this favourable treatment. In the nature of the case the Financial Secretary must know it is impossible to produce concrete evidence in this House as to facts, figures and names. I can only say from what I hear from people who are concerned with this kind of thing—from accountants, tax experts and others—that in several fields, particularly in the fields of entertainment, business, motor cars and some other ways there are undoubtedly opportunities for escaping or evading taxes which are not open to those paying tax in other categories. Since the Financial Secretary challenges us for evidence I will mention one individual case without names which rather surprised me and caused me uneasiness when I first came across it.
This was a case not strictly of a businessman but of a professional man who was earning an income of nearly five figures. He was allowed by the Inland Revenue, under normal rules, to enjoy one-third of the whole of that income of nearly five figures entirely tax free on the grounds of his supposed professional expenses. An income of several thousands a year tax free, even though that is recognised by the Inland Revenue, does not appear fair to the ordinary taxpayer under P.A.Y.E. It is hard to estimate how general such a practice as this is, but the case I have in mind was the general practice in the profession concerned.

Mr. Colegate: I only want to get this point clear. The right hon. Gentleman said that the Inland Revenue had allowed this man to have one-third of his income free of tax. Surely if the Inland Revenue allowed that there would be no unfairness, inquisitorial powers and affidavits. Surely where the Inland Revenue thinks that it is right there cannot be any abuse going on. There could only be abuse if they did not allow it.

Mr. Jay: Our case is—and I thought my hon. Friend the Member for Sowerby (Mr. Houghton) explained it very fully—


that the Inland Revenue have not in our view sufficient powers to take steps where they have reason to suspect that there are abuses.

Mr. Colegate: But have they any reason to suspect it in this case when they allowed it?

Mr. Jay: Surely the hon. Member can understand that if the Inland Revenue, as we believe, have not sufficient powers to deal with certain matters it is not possible for them to take action, and we are entitled to ask if their powers are sufficient for that purpose. That is the case made by my right hon. and learned Friend, and I think that the hon. Member must be able to follow that line of argument.
5.30 p.m.
However, if there are some cases—let us assume for the moment that there are—we find ourselves in an exceedingly undesirable position in which the wage earners as a whole may begin to feel that the Income Tax system is not being imposed as fairly as it might. Surely the real objection to tax evasion is that it is unfair to the honest taxpayer. The great majority of taxpayers are honest about the matter, and there are very many expenses, business and professional, which are genuine. The difficulty simply arises from the fact that there is a small

minority of cases in which they are not so legitimate. Our proposal is simply to ensure that action can be taken in that small minority of cases.

The Financial Secretary asks why it was, and what case had been made out to show that the proposal would make any difference to the existing situation. If it would make no difference, if it would have no effect in bringing these abuses to an end, I do not understand why hon. Gentlemen opposite oppose it so passionately. If it really has no substance and no effect, there is no reason for all this consternation and opposition to it. When all is said and done, it is simply a proposal that those who have already made certain affirmations to the Inland Revenue should be asked to swear that what they have already said is true. I should have thought that the very least that could be said of such a proposal was that it is harmless. If we have established the case, as I think we have, that some of these abuses exist, that at best this new Clause would place in the hands of the Inland Revenue a useful weapon, and that at the very worst it could do not harm to anyone, the House should support the new Clause.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 219: Noes, 254.

Division No. 217.
AYES
[5.33 p.m.


Acland, Sir Richard
Carmichael, J.
Foot, M. M.


Albu, A. H.
Castle, Mrs. B. A.
Forman, J. C.


Allen, Arthur (Bosworth)
Clunie, J.
Fraser, Thomas (Hamilton)


Allen, Scholefield (Crewe)
Coldrick, W.
Freeman, John (Watford)


Anderson, Alexander (Motherwell)
Collick, P. H.
Gaitskell, Rt. Hon. H. T. N


Anderson, Frank (Whitehaven)
Corbet, Mrs. Freda
Gibson, C. W.


Attlee, Rt. Hon. C. R.
Cove, W. G.
Glanville, James


Awbery, S. S.
Craddock, George (Bradford, S.)
Gordon-Walker, Rt. Hon. p. C.


Bacon, Miss Alice
Crosland, C. A. R.
Greenwood, Anthony (Rossendale)


Barnes, Rt. Hon. A. J.
Crossman, R. H. S.
Grey, C. F.


Bartley, P.
Cullen, Mrs. A.
Griffiths, Rt. Hon. James (Llanelly)


Bellenger, Rt. Hon. F. J
Daines, P.
Griffiths, William (Exchange)


Bence, C. R.
Dalton, Rt. Hon. H.
Hale, Leslie


Benn, Hon. Wedgwood
Darling, George (Hillsborough)
Hall, Rt. Hon. Glenvil (Colne Valley)


Benson, G.
Davies, Ernest (Enfield, E.)
Hall, John T. (Gateshead, W.)


Beswick, F.
Davies, Harold (Leek)
Hamilton, W. W


Bing, G. H. C.
Davies, Stephen (Merthyr)
Hannan, W.


Blackburn, F.
de Freitas, Geoffrey
Hargreaves, A.


Blenkinsop, A.
Deer, G.
Harrison, J. (Nottingham, E.)


Blyton, W. R.
Delargy, H. J.
Hastings, S.


Boardman, H.
Dodds, N. N.
Hayman, F. H.


Bottomley, Rt. Hon. A. G.
Donnelly, D. L
Healey, Denis (Leeds, S. E.)


Bowden, H. W.
Driberg, T. E. N.
Henderson, Rt. Hon. A. (Rowley Regis)


Bowles, F. G.
Dugdale, Rt. Hon. John (W. Bromwich)
Herbison, Miss M.


Braddock, Mrs. Elizabeth
Ede, Rt. Hon. J. C.
Hewitson, Capt. M.


Brockway, A. F.
Edelman, M.
Hobson, C. R.


Brook, Dryden (Halifax)
Edwards, Rt. Hon. John (Brighouse)
Holman, P.


Broughton, Dr. A. D. D
Evans, Albert (Islington, S. W.)
Holmes, Horace (Hemsworth)


Brown, Thomas (Ince)
Evans, Stanley (Wednesbury)
Houghton, Douglas


Burke, W. A.
Fernyhough, E.
Hoy, J. H.


Burton, Miss F. E.
Fletcher, Eric (Islington, E.)
Hubbard, T. F.


Butler, Herbert (Hackney, S.)
Follick, M.
Hudson, James (Ealing, N.)




Hughes, Emrys (S. Ayrshire)
Morley, R.
Steele, T.


Hughes Hector, (Aberdeen, N.)
Morrison, Rt. Hon. H. (Lewisham, S.)
Stewart, Michael (Fulham, E.)


Hynd, H. (Accrington)
Moyle, A.
Stokes, Rt. Hon. R. R.


Irvine, A. J. (Edge Hill)
Mulley, F. W.
Strachey, Rt. Hon. J.


Irving, W. J. (Wood Green)
Nally, W.
Strauss, Rt. Hon. George (Vauxhall)


Isaacs, Rt. Hon. G. A.
Neal, Harold (Bolsover)
Stross, Dr. Barnett


Janner, B.
Noel-Baker, Rt. Hon. P. J.
Summerskill, Rt. Hon. E.


Jay, Rt. Hon. D. P. T.
Oliver, G. H.
Swingler, S. T.


Jeger, George (Goole)
Orbach, M.
Sylvester, G. O.


Jeger, Dr. Santo (St. Pancras, S.)
Oswald, T.
Taylor, Bernard (Mansfield)


Johnson, James (Rugby)
Padley, W. E.
Taylor, Rt. Hon. Robert (Morpeth)


Jones, David (Hartlepool)
Palmer, A. M. F.
Thomas, Ivor Owen (Wrekin)


Jones, Frederick Elwyn (West Ham, S.)
Panned, Charles
Thomson, George (Dundee, E.)


Jones, Jack (Rotherham)
Pargiter, G. A.
Thornton, E.


Keenan, W.
Parker, J.
Timmons, J.


Key, Rt. Hon. C. W
Peart, T. F.
Tomney, F.


King, Dr. H. M.
Plummer, Sir Leslie
Turner-Samuels, M


Kinlay, J.
Popplewell, E.
Ungoed-Thomas, Sir Lynn


Lee, Miss Jennie (Cannock)
Price, Joseph T. (Westhoughton)
Usborne, H. C.


Lever, Leslie (Ardwick)
Proctor, W. T.
Viant, S. P.


Lewis, Arthur
Pryde, D. J.
Wallace, H. W.


Lindgren, G. S.
Pursey, Cmdr. H.
Weitzman, D.


Lipton, Lt.-Col. M.
Rankin, John
Wells, Percy (Faversham)


Logan, D. G.
Reid, Thomas (Swindon)
Wells, William (Walsall)


McGhee, H. G.
Reid, William (Camlachie)
Wheatley, Rt. Hon. John


McGovern, J.
Rhodes, H.
Wheeldon, W. E.


McInnes, J.
Richards, R.
White, Henry (Derbyshire, N. E.)


McKay, John (Wallsend)
Robens, Rt. Hon. A.
Whiteley, Rt. Hon. W.


McLeavy, F.
Robinson, Kenneth (St. Pancras, N.)
Wigg, George


MacPherson, Malcolm (Stirling)
Ross, William
Willey, F. T.


Mallalieu, J. P. W. (Huddersfield, E.)
Royle, C.
Williams, Rt. Hon. Thomas (Don V'll'y)


Mann, Mrs. Jean
Shackleton, E. A. A.
Williams, W. R. (Droylsden)


Manuel, A. C.
Shinwell, Rt. Hon. E.
Williams, W. T. (Hammersmith, S.)


Marquand, Rt. Hon. H. A.
Short, E. W.
Wilson, Rt. Hon. Harold (Huyton)


Mason, Roy
Silverman, Sydney (Nelson)
Winterbottom, Richard (Brightside)


Mayhew, C. P.
Simmons, C. J. (Brierley Hill)
Woodburn, Rt. Hon. A.


Messer, Sir F.
Skeffington, A. M.
Wyatt, W. L.


Mikardo, Ian
Slater, Mrs. H. (Stoke-on-Trent)
Yates, V. F.


Mitchison, G. R
Slater, J. (Durham, Sedgefield)
Younger, Rt. Hon. K


Monslow, W.
Sorensen, R. W.



Moody, A. S.
Soskice, Rt. Hon. Sir Frank
TELLERS FOR THE AYES:


Morgan, Dr. H. B. W.
Sparks, J. A.
Mr. Wilkins and




Mr. John Taylor.




NOES


Aitken, W. T.
Channon, H.
Graham, Sir Fergus


Allan, R. A. (Paddington, S.)
Clarke, Col. Ralph (East Grinstead)
Gridley, Sir Arnold


Alport, C. J. M.
Clyde, Rt. Hon. J. L.
Grimond, J.


Amery, Julian (Preston, N.)
Colegate, W. A.
Grimston, Hon. John (St. Albans)


Amory, Heathcoat (Tiverton)
Conant, Maj. R. J. E.
Grimston, Sir Robert (Westbury)


Anstruther-Gray, Major W. J.
Cooper, Sqn. Ldr. Albert
Hall, John (Wycombe)


Ashton, H. (Chelmsford)
Cooper-Key, E. M.
Harden, J. R. E.


Assheton, Rt. Hon. R. (Blackburn, W.)
Craddock, Beresford (Spelthorne)
Hare, Hon. J. H.


Astor, Hon. J. J,
Crosthwaite-Eyre, Col. O. E.
Harris, Fredric (Croydon, N.)


Baldock, Lt.-Cmdr. J. M.
Crouch, R. F.
Harrison, Col. J. H. (Eye)


Baldwin, A. E.
Crowder, Sir John (Finchley)
Harvey, Air Cdre. A. V. (Macclesfield)


Banks, Col. C.
Crowder, Petre (Ruislip—Northwood)
Harvey, Ian (Harrow, E.)


Barber, Anthony
Cuthbert, W. N.
Harvie-Watt, Sir George


Baxter, A. B.
Darling, Sir William (Edinburgh, S.)
Hay, John


Beamish, Maj. Tufton
Deedes, W. F.
Heald, Sir Lionel


Bell, Ronald (Bucks, S.)
Digby, S. Wingfield
Heath, Edward


Bennett, F. M. (Reading, N.)
Dodds-Parker, A. D.
Henderson, John (Cathcart)


Bennett, William (Woodside)
Donaldson, Cmdr. C. E. McA.
Higgs, J. M. C.


Bevins, J. R. (Toxteth)
Doughty, C. J. A.
Hill, Dr. Charles (Luton)


Birch, Nigel
Douglas-Hamilton, Lord Malcolm
Hill, Mrs. E. (Wythenshawe)


Bishop, F. P.
Drayson, G. B.
Hinchingbrooke, Viscount


Boothby, Sir R J. G
Duncan, Capt. J. A. L.
Hirst, Geoffrey


Bowen, E. R.
Duthie, W. S.
Holland-Martin, C. J.


Boyd-Carpenter, J. A.
Eccles, Rt. Hon. Sir D. M.
Holmes, Sir Stanley (Harwich)


Boyle, Sir Edward
Elliot, Rt. Hon. W. E.
Holt, A. F.


Braine, B. R.
Fell, A.
Hope, Lord John


Braithwaite, Sir Albert (Harrow, W.)
Finlay, Graeme
Hornsby-Smith, Miss M. P.


Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Fisher, Nigel
Horobin, I. M.


Bromley-Davenport, Lt.-Col. W. H.
Fleetwood-Hesketh, R. F.
Horsbrugh, Rt. Hon. Florence


Brooke, Henry (Hampstead)
Fletcher-Cooke, C.
Howard, Hon. Greville (St Ives)


Brooman-White, R. C.
Ford, Mrs. Patricia
Hudson, W. R. A. (Hull, N.)


Browne, Jack (Govan)
Fort, R.
Hulbert, Wing Cdr. N. J.


Buchan-Hepburn, Rt. Hon. P. G. T.
Fraser, Sir Ian (Morecambe & Lonsdale)
Hutchinson, Sir Geoffrey (Ilford, N.)


Bullus, Wing Commander E. E.
Galbraith, Rt. Hon. T. D. (Pollok)
Hutchison, Lt.-Com. Clark (E'b'rgh, W.)


Burden, F. F. A.
Galbraith, T. G. D. (Hillhead)
Hyde, Lt.-Col. H. M.


Butcher, Sir Herbert
George, Rt. Hon. Maj. G. Lloyd
Hylton-Foster, H. B. H.


Butler, Rt. Hon. R. A. (Saffron Walden)
Godber, J. B.
Jenkins, Robert (Dulwich)


Campbell, Sir David
Gomme-Duncan, Col. A
Johnson, Eric (Btackley)


Carr, Robert
Gough, G. F. H.
Johnson, Howard (Kemptown)


Cary, Sir Robert
Gower, H. R.
Jones, A. (Hall Green)







Joynson-Hicks, Hon L. W
Nabarro, G. D. N
Speir, R. M.


Kaberry, D.
Neave, A. M. S.
Spens, Sir Patrick (Kensington, S.)


Kerr, H. W.
Nicholls, Harmar
Stanley, Capt. Hon. Richard


Lambton, Viscount
Nicholson, Godfrey (Farnham)
Steward, W. A. (Woolwich, W.)


Lancaster, Col. C. G
Nicolson, Nigel (Bournemouth, E.)
Stewart, Henderson (Fife, E.)


Langford-Holt J., A.
Nield, Basil (Chester)
Stoddart-Scott, Col. M.


Law, Rt. Hon. R. K
Noble, Cmdr. A. H. P.
Storey, S.


Leather, E. H. C.
Nugent, G. R. H
Strauss, Henry (Norwich, S.)


Legge-Bourke, Maj. E. A. H.
Oakshott, H. D.
Stuart, Rt. Hon. James (Moray)


Legh, Hon. Peter (Petersfield)
Odey, G. W.
Studholme, H. G.


Lennox-Boyd, Rt. Hon. A. T.
O'Neill, Phelim (Co. Antrim, N.)
Summers, G. S.


Linstead, Sir H. N.
Orr, Capt. L. P. S.
Sutcliffe, Sir Harold


Lloyd, Maj. Sir Guy (Renfrew, E.)
Orr-Ewing, Charles Ian (Hendon, N.)
Taylor, Charles (Eastbourne)


Lloyd, Rt. Hon. Selwyn (Wirral)
Orr-Ewing, Sir Ian (Weston-super-Mare)
Taylor, William (Bradford, N.)


Lockwood, Lt.-Col. J. C
Osborne, C.
Thomas, Leslie (Canterbury)


Longden, Gilbert
Partridge, E.
Thomas, P. J. M. (Conway)


Low, A. R. W.
Peake, Rt. Hon. O.
Thompson, Kenneth (Walton)


Lucas, Sir Jocelyn (Portsmouth, S.)
Peto, Brig. C. H. M
Thorneycroft, Rt. Hn. Peter (Monmouth)


Lucas, P. B. (Brentford)
Peyton, J. W. W.
Thornton-Kemsley, Col. C. N


Lucas-Tooth, Sir Hugh
Pitt, Miss E. M.
Tilney, John


Lyttelton, Rt. Hon. O.
Powell, J. Enoch
Touche, Sir Gordon


McAdden, S. J.
Price, Henry (Lewisham, W.)
Turner, H. F. L.


McCallum, Major D.
Prior-Palmer, Brig. O. L.
Turton, R. H.


McCorquodale, Rt. Hon. M. S
Profumo, J. D.
Vane, W. M. F.


Mackeson, Brig. H. R.
Raikes, Sir Victor
Vaughan-Morgan, J K


McKibbin, A. J.
Rayner, Brig. R.
Vosper, D. F.


Mackie, J. H. (Galloway)
Redmayne, M.
Wade, D. W.


Maclay, Rt. Hon. John
Rees-Davies, W. R
Wakefield, Edward (Derbyshire, W.)


Maclean, Fitzroy
Remnant, Hon. P.
Wakefield, Sir Wavell (St. Marylebone)


Macleod, Rt. Hon. Iain (Enfield, W.)
Renton, D. L. M.
Walker-Smith, D. C.


MacLeod, John (Ross and Cromarty)
Roberts, Peter (Heeley)
Ward, Hon. George (Worcester)


Macpherson Niall (Dumfries)
Robinson, Roland (Blackpool, S.)
Ward, Miss I. (Tynemouth)


Maitland, Patrick (Lanark)
Rodgers, John (Sevenoaks)
Waterhouse, Capt. Rt. Hon. C.


Manningham-Buller, Sir R. E.
Ropner, Col. Sir Leonard
Webbe, Sir H. (London & Westminster)


Markham, Major Sir Frank
Russell, R. S.
Wellwood, W.


Marlowe, A. A. H.
Ryder, Capt. R. E. D.
Williams, Gerald (Tonbridge)


Marples, A. E.
Salter, Rt. Hon. Sir Arthur
Williams, Sir Herbert (Croydon, E.)


Marshall, Sir Sidney (Sutton)
Scott, R. Donald
Williams, Paul (Sunderland, S.)


Maude, Angus
Scott-Miller, Cmdr. R.
Williams, R. Dudley (Exeter)


Maudling, R.
Shepherd, William
Wills, G.


Maydon, Lt.-Comdr. S. L. C
Simon, J. E. S. (Middlesbrough, W.)
Wilson, Geoffrey (Truro)


Medlicott, Brig. F.
Smithers, Peter (Winchester)
Wood, Hon. R.


Molson, A. H. E.
Smithers, Sir Waldron (Orpington)



Monckton, Rt. Hon. Sir Walter
Smyth, Brig. J. G. (Norwood)
TELLERS FOR THE NOES:


Morrison, John (Salisbury)
Snadden, W. McN.
Sir Cedric Drewe and


Mott-Radclyffe, C. E.
Spearman, A. C. M.
Mr. Richard Thompson.

New Clause.—(BODY CORPORATE IN VOLUNTARY LIQUIDATION.)

If a body corporate (herein called "the first body corporate") shall go into voluntary liquidation and the property and undertaking of the first body corporate or any substantial portion thereof is acquired by way of sale by another body corporate (herein called "the second body corporate") the membership of which is the same or substantially the same as the membership of the first body corporate, and it shall appear to the Commissioners of Inland Revenue that the main or one of the main purposes of the liquidation of the first body corporate and the acquisition of its property and undertaking or a substantial portion thereof as the case may be by the second body corporate (herein called "the transaction") was to avoid or reduce liability to income tax or that the effect of the transaction reasonably to be anticipated was the avoidance or reduction of liability to income tax, they may at any time before the first body corporate is dissolved apply to a judge of the High Court, and on such an application being made no further step shall be taken to bring about the dissolution of the first body corporate until the judge to whom the application is made shall give leave in that behalf, and if it shall be proved, on an issue being directed, that the main or one of the main purposes or the effect of the transaction reasonably to be anticipated

were the purposes or effect aforesaid, the judge may declare that the acquisition shall be void and of no effect and that the second body corporate shall be incapable of acquiring directly or indirectly any portion of the property or undertaking of the first body corporate, and upon the making of such a declaration the said acquisition shall be void and of no effect for any purpose, and the property and undertaking so acquired of the first body corporate shall so far as it has not been disposed of by the second body corporate to a person acquiring it without notice of the transaction remain vested in the first body corporate, and any consideration moving from the second body corporate shall so far as may be practically possible remain vested in the second body corporate.—[Mr. E. Fletcher.]

Brought up, and read the First time.

Mr. Eric Fletcher: I beg to move, "That the Clause be read a Second time."
This new Clause aims at stopping up a loophole in the law which has attracted a good deal of attention recently, not only in the financial Press but also in the daily Press. Therefore, I hope that the Government will not think, as was suggested about the new Clause which


we have just been discussing, that this one is merely the outcome of excessive zeal on the part of members of the Labour Party to close up defects in the existing code of the Income Tax Acts. It is perfectly true that we on these benches are most anxious to stop all tax evasion and to do all that we can to ensure that the Government of the day closes up every loophole which makes it possible for a firm to escape taxation by a technical, artificial device.
This new Clause deals with a very clear device which, accordingly to the information in my possession, has been extensively used during recent months, and is one which, if allowed to continue, must inevitably continue to cost the Exchequer a great deal of money. Before I seek to explain to the House exactly how our proposed new Clause would work, may I explain the particular evil at which it is directed?
As the House will be aware, there are provisions in the Income Tax code which enable a company, when it ceases to trade, to have its taxes adjusted on a different basis. For example, a company whose trading accounts end on 30th September in any given year pay Income Tax for the year ended, say, on 5th April, 1953, not on the profit which they made in the year ended 30th September, 1952, but on the profit for the year ended 30th September, 1951. It so happens that a certain number of companies had an exceptionally good year in 1951 and for various reasons a bad year in 1952.
That was particularly the case in one or two specific industries, notably the textile industry of Lancashire, where a slump occurred rather more than 12 months ago, with the result that the very high level of profits that had arisen in 1951 was succeeded by a very bad year. If any of those companies had decided to close down their business it would have been quite normal and proper that they should not have been taxed in their final year's trading on the exceptionally high profit of 1951 but should have been allowed to bring into account the actual very low profits made during the last year of their trading. I think that everybody in the House will agree that the ordinary Income Tax provisions with regard to cessation are designed to meet the cases of companies which genuinely cease trading operations.
5.45 p.m.
But it has been found recently—I think probably to the surprise of a number of people interested in textile and other companies—that during the last few months there has been a spate of companies, many of them well-known companies, some of them almost household names in Lancashire and, indeed, elsewhere, which have suddenly changed their name by the introduction of the word "Holdings" after their name and before the word "Limited." What has happened is that the old company has closed down and has transferred the whole of its assets and business to a technically new company, but a company which adopts the name of the old company with the introduction of some such distinctive words as "(Holdings)" or "(1953)."
The result of that is that these companies have been able, to continue to carry on their business; the shareholders of the new company have been identical with the shareholders of the old company, and in everything except in name it has been the same body of people who have been carrying on the business, which in many cases has been in operation for a great many years. These companies have resorted to the device of winding up the old company and transferring their assets to a new company with an almost identical name for this reason—that by so doing they have found that they have been able to get the benefit of the cessation provisions of the Finance Acts.
These provisions were only designed to meet the position where there was a genuine cessation. They were never intended to operate when in fact there was no genuine cessation but merely an entirely artificial cessation, while, in fact, the old business continued with the same body of shareholders benefiting, and the same directors carrying on the business with the benefit of the goodwill and everything associated with the capital.

Mr. Jack Jones: That is a racket.

Mr. Fletcher: As my hon. Friend says, that is a racket. All I want to do at the moment is to explain the facts. If it is a racket, it is one which I must admit has been openly conducted in a great many cases, because to enable this device to be carried out the shareholders have


to be circulated and reasons have to be given by the board to the shareholders as to the purpose of dissolving one company and transferring the assets to a similar company and so forth.
In many cases the directors have stated, quite candidly, as the reason for the reorganisation, that it will save the shareholders a large amount of tax. In some cases it may be £25,000, in others £100,000, and I am told that in one case the amount of tax saved by this ruse, or device or wangle is as much as three-quarters of a million pounds. That is the evil which this new Clause is directed towards stopping.
If I am asked what is the scale on which this abuse is being worked, all I can say from the information I have been able to gather is that there must have been in the last year or 18 months at least 100 or 200 companies which have resorted to this device and, as far as I can calculate, the amount lost to the Treasury must be at least £10 million. That is the magnitude of the problem.
I hope that this new Clause, in its present or in some other form, will commend itself to the Government. I hope that the Government will be as anxious as we are to stop this scandal for, unless it is stopped, let us consider what the position will be. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) was saying a few minutes ago, with a certain amount of justification, that a taxpayer is entitled, within the law, to arrange his tax affairs to his own advantage. Yet the corollary of that is that when a glaring loophole in the law presents itself, it is the duty of the Government of the day to see that the loophole is stopped up, because unless it is stopped, and stopped immediately, the mere acquiescence by the Government in the continuation of the state of affairs which permits it is an open invitation and encouragement to others to resort to the loophole that exists, and avoid tax.
I have in my hand a list which was printed in the "Manchester Guardian" of 4th May this year of 50 or 60 Lancashire textile companies which have—I was about to say been through this bogus reconstruction, but I do not want to use too opprobrious an epithet—recently changed their name in the way I have described although they are still continuing business.
Knowing that this racket exists, let us consider the position of all the other companies similarly placed. If 60 companies can do it and get away with it, ought other companies, particularly their competitors, to do it or ought they not? As the law stands it is perfectly legal for them to do it, and in a sense, I suppose, the directors of the other companies might almost be criticised by their shareholders if they do not resort to this device. Therefore, if the law is allowed to stand as it is, particularly after being ventilated in the House today, I should doubt if it would be right in future to call any company which carries out this operation a racketeer. It is for the Government to stop it.
The Government are in this position. They have either to acquiesce in this state of affairs or they have to change the law. If they leave the position as it is I should have thought that other companies in the next 12 months which try to save for their shareholders another £10 million, or perhaps more, which ought to go to the Revenue, will be able to say, "This was well known on 8th July, 1953, and nothing was done about it." I hope, therefore, that the Government are fully alive to the seriousness of the matter. It is a state of affairs which was never intended, and it is a device of a highly technical and artificial kind which gives one body of taxpayers an unfair and unjust advantage over all others and produces a substantial loss of revenue to the Exchequer.
The House will have observed that the new Clause is in a form which, owing to the rules of Order imposing limitations upon us, may not be the most ideal form. We owe it to the skill and ingenuity of my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) for having designed a form of words within the rules of order. Our suggestion is the modest one that, where a bogus reconstruction scheme of this kind, accompanied by a transfer of assets from an old company about to be wound up to a new company formed with an identical name, comes to the notice of the Inland Revenue, they should be able to go to a judge of the High Court and ask for an order that no further steps be taken to carry out the transaction until the matter has been investigated. If, on investigation, the court comes to the conclusion that the only object, or


the main object of the reorganisation scheme, is the avoidance of tax then the whole transaction can be declared null and void. It may well be the new Clause in this form does not go far enough.
I should have thought that no honest trading company could have objected to a provision of that kind. It leaves untouched any legitimate or reasonable scheme of reconstruction carried out for ordinary business reasons and having no relation to an attempt to avoid tax. The new Clause is designed merely to catch and to stop those who resort to this ruse for the single purpose, as admittedly on their own showing a great many have done, of saving their shareholders large sums of taxation.
If the Economic Secretary is prepared to concede the principle of the new Clause, I think I am speaking for my other hon. Friends in saying that I should welcome any improvements in drafting that the Government, with their resources, can introduce. If, therefore, an undertaking could be given to put a Clause which they might think would be not less effective but probably more effective, into the Income Tax Act for the purpose of securing the same object, I should be satisfied.
I should not, however, be satisfied with a mere warning to traders that, if they continue to do this, it will be stopped next year. That is not the way for the Government to legislate. It is not sufficient for the Government to make pronouncements about what they think is ethical and to say that, if it goes on, there may be legisation, even retrospective legislation, next year. That is not the way we want the matter dealt with. We want it dealt with now. For those reasons I hope that the Government will accept the new Clause.

6.0 p.m.

Mr. H. Rhodes: I beg to second the Motion.
In a few weeks before 5th April this year, I believe that about 56 companies in Lancashire changed their names. It might have appeared from this that an important financial reconstruction was being undertaken to improve the efficiency of the industry. Let me quote what the "Manchester Guardian" commented on it:
The impression may have been given that a movement for reorganising the financial

structure and direction of cotton trade firms had suddenly begun but, during the last three or four weeks, the movement seems just as suddenly to have stopped. The cessation of the changes, at or about the end of the income tax year, suggests the reason why most of them were made.
That is a quotation taken from the "Manchester Guardian" of 4th May.
What are the advantages that accrue to firms who do this? Normally, a company is assessed for taxation in any one year on the profit made in that one of its own financial years which ended during the previous tax year. It sounds complicated but is, in fact, very simple. A company whose accounts cover a period of 12 months—say, to 30th June—will be assessed for taxation in the year ended 5th April, 1953, on profits earned in the 12 months up to the end of June, 1951. That means that a firm which had done very well and had made large profits in 1950 and 1951, would have to pay taxation on those profits before the end of the financial year 1952–53.
As it happens, trade in Lancashire and in many industries elsewhere reached a peak in 1951 and record profits were made. Some companies, perhaps more wide awake than others, saw in the future a lessening of activity and, perhaps, a slump round the corner. In the cotton industry, which I am using as an example, that is what in fact happened. The result was that quite a lot of firms, if they did not actually make losses, had considerably reduced profits. I suppose that some smart lawyer or accountant hit on the idea of bringing into being the cessation rules in the present taxation laws. Under the cessation rules, if a new company is started its taxation liability for the first tax year cannot be assessed on the profits of previous years, and so the assessment is based on an apportionment of the profits made in the first year of its operation. That, I believe, is an accurate description of the cessation rules.
Take the case of a firm which made up its accounts, and made a large profit, to the end of June, 1951. I am not mentioning its name, but this is one that I have taken from the records. In the year ended 30th June, 1951. this firm's consolidated net profit was in the region of £2 million. Its consolidated net profit in June, 1952, was below £500,000. That is a difference of £1,500,000 taxed at 9s. in the £. Can we allow this device to continue, or what attitude are we to


adopt? Are the Government going to stop this practice or will they give the advantage to people who did not do this, whether because they simply did not know about it or because it was below their dignity or was unethical? We must face up to this question today.
I have another example of a firm whose accounts are made up to 31st August. In 1951, their profit was nearly £1 million. In 1952, it was £262. As far as I understand, they have not paid any of their assessment. They were assessed on their profits for 1951 and should have paid before the end of the 1952–53 financial year, but they have not done so.
The reasons for all this can be seen in the "Financial Times" almost any day. My examples have been taken during the past week. Companies describe the bringing back of the tax reserves for which they have made provision. One company says "Added investment income" and gives a certain figure, and it refers to it as "tax over-provision." It then proceeds to pay a dividend of 15 per cent. Without exaggeration, in my opinion that is paying away my money or the money of anybody else who is a taxpayer. Surely, we are assessed on the basis of how much we receive, and each individual is assessed according to his income. To that extent, every taxpayer supports the economy of the country.
Let me give another example, taken during the past week. Anybody who cares to watch the "Financial Times" can see the picture:
From provisions in the previous years the sum of £110,000 no longer required is brought back. …
The facts are established. There is no doubt that this situation must be changed. We haul up before our magistrates poor parsons who have not disclosed their Easter offerings, and yet we have, as I have shown, a case in which nearly £750,000 will be excused, unless something is done about it today.
The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), when speaking about the Income Tax law, said that a person was entitled to dodge it if he could. Every right thinking person hopes that we will make a real recovery in our economic position, both internally and overseas. Tremendous importance is attached to productivity and production. I have always felt that the

basis of productivity is good relations between management and workers, but we cannot have good relations if the workers in a factory know that by altering its name their firm can save itself a tremendous amount of tax and thereby impose extra taxation on other people.
There is another point about the matter. It has not finished here. This year and last year have been good years for those engaged in munitions manufacture. We shall have a crop of firms engaged in munitions doing exactly the same thing. The practice may have finished in the textile industry and many consumer goods industries because their slump is over but not so munitions firms.
As the Economic Secretary to the Treasury knows, I have been hammering at this question now for some months. During my inquiries I rang up a responsible firm of solicitors who have been doing this kind of work. I asked, "Could you give me some information on how to form a holding company?" The reply was." We have done 20 and we are going to do a lot more." That was last week, so they must be expecting quite a considerable clientele coming along, and it may be coming from the munitions industry.
We need a clear answer from the Government today; what are they going to do about it? Such an answer would set at rest the minds of solicitors and accountants who will not touch this kind of thing with a barge pole. It would make them feel that the Government have their interests at heart. There are many hard cases of solicitors and accountants who refuse to have anything to do with this kind of thing. Despite what the noble Lord the Member for Dorset, South said about ethics, there are a lot of such people in business now. I consider that those accountants and solicitors who have been harmed by this wangle are entitled to a statement about what the Government intend to do.
I believe that much damage has been done. It is very difficult to find out all the particulars and I do not know the amount involved, but the more I delve into the question the bigger the problem becomes and the larger the amount of money involved. I ask the Government to give a clear indication of what they intend to do.

The Economic Secretary to the Treasury (Mr. R. Maudling): I am obliged to the hon. Members who have moved and seconded the Motion for raising this important matter, airing it and for the way in which they have put their arguments. I shall endeavour to follow in the same tone in which they started the discussion.
The device in question has been described by the two hon. Members and it is probably not desirable to go into too much detail in explaining how this can be done. It arises from the cessation provisions in regard to Income Tax, which are very complicated, as the Millard Tucker Committee pointed out. Broadly, the effect of having a cessation and a company reconstruction of this kind in a period when switching from high profits to low profits will mean that the company is taxed twice on the low profits period and not on the high profits period. In cases where the device is adopted it means that the company concerned saves a large amount of taxation.
I want to be clear on one point which, I think, was raised by the hon. Member for Islington, East (Mr. E. Fletcher)—that this is not a question of fraudulent evasion. The hon. Member who seconded the Motion impugned that by saying that people are brought before the courts and prosecuted because prosecutions had occurred in cases of fraudulent—

Mr. Jack Jones: Would the Minister call it a legal twist?

Mr. Maudling: There is no legal twist.

6.15 p.m.

Mr. E. Fletcher: I was careful to say that this was not a fraud. My complaint is that it is legitimate as the law stands at present.

Mr. Maudling: There is a slightly different twist, possibly, in the remarks of the seconder. This is a perfectly legal thing to do.

Mr. Rhodes: I did not suggest it was a fraudulent thing—I think it is. What I was suggesting was that if it is possible to bring before the court a poor parson for evading taxation on his Easter offerings, how serious should this House regard this matter and act upon it?

Mr. Maudling: I am obliged to the hon. Member and I am sure we agree on

this. I was concerned to make it clear that companies were doing what it is perfectly legal for them to do, and doing it openly. We have heard quoted today several times that the taxpayer is entitled to arrange his affairs so as to attract the minimum of tax and, legally speaking, that is entirely true.
To take a trivial example, we all know that near the end of the Income Tax year there is a boom in marriages. That is a quite legitimate practice to avoid paying the tax. But there is a different sort of degree between that sort of arrangement of one's affairs and the deliberate adoption of an artificial and fictional device designed to contravert the whole purpose of the Income Tax.
There is a difference in kind there and a difference in kind which the Government and the House would wish to recognise. I am sure that everyone in the House will thoroughly deprecate the use of a dissolution of a company and a reforming of a company by a change that is purely nominal for the sole and only purpose of avoiding taxation. I am sure we all agree that that is thoroughly to be deprecated.
It is difficult to know the extent of this problem, naturally, because it is not always until delayed proceedings that one knows what has been happening. I think it is true to say that the device can only be employed in fairly unusual circumstances where there has been a period of high profits followed by a period of low profits, such as happened in the textile industry, to which the hon. Member for Ashton - under - Lyne (Mr. Rhodes) referred. There has been a bunch of those examples, but that period has passed—

Mr. Rhodes: Not in munitions.

Mr. Maudling: I should have thought that at present those particular circumstances had passed. The difficulty of dealing with the problem is the difficulty of prohibiting reconstructions which are designed to avoid taxation without, at the same time, prohibiting reconstructions which are perfectly legitimate and which may, incidentally, save tax as well. There is the difficulty, which always obtains in these cases, of distinguishing between the genuine case and the case which is not genuine. That is one of the reasons which makes it all the more important


that artificial devices of this kind should not be employed by companies, because they are bound in the long run to prejudice genuine companies.
We have been studying this problem with very considerable care. We are obliged to the hon. Members for the proposed new Clause they have put forward and we have studied that with care. I notice that the thought put into it is exemplified by the changes they have made between the Committee stage proposal and the proposal on Report stage about, for example, not prejudicing the innocent party. We have studied the Clause, but we find that, in practice, it seems unlikely that it would really work satisfactorily.
It introduces certain innovations in Income Tax practice. I do not think that anyone would regard that as an objection if the Clause were otherwise satisfactory, but we fear that, in practice, the sort of declaration from the court, which is the basis of the proposal, could not be made until a very considerable period had elapsed for investigation, discussion, argument and counter-argument and possibly appeal.
In the intervening period the new company would have carried on the undertaking, would have entered into business contracts and incurred liabilities, including the liability to tax upon profits. On a declaration being made under the Clause that the act was void the new company would lose the property. But the Clause makes no provision for the contracts and the liabilities of the new company to be transferred back to the old company. There is the more important point that in the intervening period, which would be rather extensive, the new company might have developed and changed quite substantially in its character from the character of the old company.
Those are practical objections. There is also the perhaps even more practical objection of the very great difficulty of deciding what was the main purpose of the company reconstruction. My impression is that this phraseology was taken from some of the Profits Tax legislation which I am told is not very easy to administer. The problem is to find an effective test to decide between the genuine case and what one would call the artificial or fictitious case.
We have studied the Clause very carefully and we are obliged for the suggestion it contains, but we do not feel that this method would be satisfactory. We are studying, deliberately and carefully, methods of dealing with the problem. I hope that what I have to say will be noted. I hope that no reputable firm or responsible professional adviser will regard this type of device as the sort of thing they should adopt. I say that quite clearly. I would also say that it is undoubtedly to the general disadvantage that this type of practice should develop. It should not be assumed by companies that it is necessarily in their own advantage that they should do this.
We are studying carefully what should be done. I do not want to say too much about what we are likely to do because, in trying to tackle questions of tax avoidance, it is not always wise to give too much notice in advance of what we intend to do. I would leave it that we accept much of what hon. Gentlemen opposite say about this problem, and that we do not think the use of this device to avoid taxation is the sort of thing in which a reputable firm or a reputable company should engage.
In view of his responsibilities and his interest in the matter, my right hon. Friend is keeping a careful eye on the position and he will not hesitate to take action—if necessary, drastic action—if he considers that the state of the public revenue call for it. I cannot go beyond that. We cannot accept this new Clause as it stands. We do not believe that it is the right way to deal with the problem, but I assure hon. Gentlemen opposite that what I have said I have most carefully considered and it is most sincerely meant.

Mr. William Ross: The hon. Gentleman made it plain at the start of his speech that what these companies were doing was legal. How, then, can he ask -us to accept this suggestion that the Chancellor will take action? Cannot he tell us what kind of action will be taken? If it is legal what kind of action can be taken?

Mr. Frederic Harris: I have listened to every word of this discussion and I am rather confused. I should like to ask one or two questions. Am I not right in saying that the tax


to which reference is made is the future assessment of tax based on the profits the companies have made in the past year or so? If so, this is not a question of avoidance of tax on profits that the companies themselves have made: this is a question of stopping the immediate payment of tax on high profits which would have followed if the assessment had gone on and the companies had traded as they were. If that is so—

Mr. Ross: That is not so.

Mr. Harris: I am not trying to cover up any point. I enter into the argument on a serious basis.
If the profits have gone on a very high level and then, suddenly, there has been a stump and if the companies had to continue paying the tax in the subsequent year on the same basis, they would, presumably, be up against it financially. They just could not meet their obligations and the tax demands. As the tax people would not wait for the payment of such tax, presumably these companies might go broke.
On the other hand, if they are able to go into voluntary liquidation and then start again, then, as long as they are not avoiding the payment of tax—

Mr. Mitchison: Does not it occur to the hon. Gentleman that the simplest way of avoiding that difficulty is to provide for the tax when one makes the profit?

Mr. Harris: I do not disagree with the hon. and learned Member about that, but where companies have been trading on a very high basis and, possibly, using resources which they should not have used—over-trading, in fact—it may be that they are in difficulty if they meet the additional tax demands very quickly. The point I want to make is that by this device the companies would avoid paying tax on profits actually made. I understand that the answer is, "Yes" and that satisfies me.

Mr. Jack Jones: I have sat in the House for many years and listened to many discussions. I pay tribute to the Economic Secretary. Usually he comes to the Dispatch Box and sweeps away his notes and seems very composed in his answers. I have never seen him more perplexed and uncertain of his case than

he was today. The hon. Gentleman nods. I think he agrees.

Mr. Maudling: indicated dissent.

Mr. Jones: I am not a lawyer, an economist, or a textile manufacturer, but the facts of this case are simple. It seems that if the law is to remain as it is now the textile industry, in particular, will, in the boom years, profit accordingly and will also profit in the lean years. Those in the industry will form a new company. The same faces, the same personnel, the same shareholders will continue to wax fat, however the cat jumps. In ordinary workmen's English it is nothing but a racket—a legal twist.
The textile industry is the one industry which cannot afford to have this sort of thing. Hon. Gentlemen opposite may ask what I know about this industry when I am supposed to be a steel expert. I did not represent Bolton for five years without knowing something about what was going on in the textile industry. This is the one industry where people are being told to pull up their socks, to accept redeployment, new forms and conditions and face intensive competition. The Japanese are literally working on roller skates and Germany is coming into the picture.
The workers in Lancashire who fear slumps and all that goes with them are now being told by the public Press and HANSARD, and in other ways, that this sort of thing is to be allowed. The psychological effect on them will be disastrous when they are told that people remote from industry, with no other connection except that of money, can, by the exploitation of this loophole, keep on taking money out of the industry which the industry cannot afford.
The industry wants new machinery and new ideas, and here we have illustrations, in 56 cases given in the public Press, in which, by the simple addition of the one word "holding," companies are allowed to do this sort of thing. The Economic Secretary suggests that it was done for purposes of reconstruction; it was done for nothing else but to give to those who already have a little extra, and to make it more awkward for those who work in the industry successfully to compete with their competitors.
I suggest that the Government should find a better answer than the one they


have given us; otherwise, we should register our protest against what I consider to be a racket and a legal twist by going into the Division Lobbies and showing that we will have nothing to do with this business.

6.30 p.m.

Sir F. Soskice: I am quite sure that everybody will agree that we have had a very useful debate, because it has uncovered a very serious state of affairs. It has uncovered a situation in which companies, acting within the law, may, nevertheless, impose on the shoulders of their fellow taxpayers liability for tax which they themselves escape running into a figure of £10 million for this year.
What can be done this year can probably also be done next year, although the Economic Secretary has said that it applied only to the preceding year. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) instanced the manufacturers of munitions and armaments, and we on this side of the House take a very serious view of this particular matter. If, as I hope, the House feels that it is ready to come to a decision, the question is: what is the decision to which we should come? The Economic Secretary I must say, has not gone anything like far enough. It is not as if this matter has just been brought to his notice.
It is difficult for the Government, on Report, to rectify a matter of this sort, but my hon. Friend the Member for Ashton-under-Lyne in most specific terms on Second Reading, drew attention to this particular situation. When the Committee stage came round, we put down a Clause which was not selected, and that is not a matter on which I could possibly have any complaint, but its very presence on the Order Paper should have brought clearly to the notice of the Government the existence of the problem and the urgency of the need to deal with it.
The Economic Secretary when considering the matter, must have been informed of the dimensions of the problem; he must have been made aware of its seriousness. The question is whether he has gone far enough in simply indicating that

we are on the Report stage and that he and those associated with him disapprove of this kind of procedure. I hope that my hon. Friends will agree that he has not gone far enough, because he has had plenty of warning and we have done everything we could to bring the matter to his notice.

The Economic Secretary has also raised criticism of the new Clause. We on this side of the House are limited by certain rules of order, and we must not, in our drafting, impose charges on the subject without the covering of a Financial Resolution. Accordingly, when we wish to initiate a debate of this sort, we could only put down a Clause that did not offend against the rules of order. You, Mr. Speaker, by calling the new clause, endorsed the view which we ourselves had formed, that the Clause was in order, and it certainly gratified us to see that it was.

I should have thought that, if not inhibited by the rules of order, it would have been quite possible to provide that, in regard to transactions of this sort, if the court declared that they were entered into with the object of avoiding tax, the company doing so should in the ordinary way be taxed on the preceding year's profits. That would be a way round it.

Unfortunately, the Government have left the matter in the situation in which we are to go for a whole year without anything being done, unless the position is dealt with by the introduction of a separate Measure. I do not know whether the Government propose to do that, but I gather from the Economic Secretary that they do not. The hon. Gentleman simply says that he does not like this type of transaction, and that is the very least which he could have said. I therefore hope that my hon. Friends will feel that they should take this matter to a Division, if for no other purpose than that of emphasising the seriousness with which they regard this particular type of transaction.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 220; Noes, 244.

Division No. 218.]
AYES
[6.37 p.m.


Acland, Sir Richard
Anderson, Alexander (Motherwell)
Bacon, Miss Alice


Albu, A. H.
Anderson, Frank (Whitehaven)
Barnes, Rt. Hon. A. J.


Allen, Arthur (Bosworth)
Attlee, Rt. Hon. C. R.
Bartley, P.


Allen, Scholefield (Crewe)
Awbery, S. S
Bellenger, Rt. Hon. F. J




Bence, C. R.
Hannan, W.
Plummer, Sir Leslie


Benn, Hon. Wedgwood
Hargreaves, A.
Popplewell, E.


Benson, G.
Harrison, J. (Nottingham, E.)
Price, Joseph T. (Westhoughton)


Beswick, F.
Hastings, S.
Proctor, W. T.


Bing, G. H. C.
Hayman, F. H.
Pryde, D. J.


Blackburn, F.
Healey, Denis (Leeds, S. E.)
Pursey, Cmdr. H.


Blenkinsop, A.
Henderson, Rt. Hon. A. (Rowley Regis)
Rankin, John


Blyton, W. R.
Herbison, Miss M.
Reid, Thomas (Swindon)


Boardman, H.
Hobson, C. R.
Reid, William (Camlachie)


Bottomley, Rt. Hon. A. G.
Holman, P
Rhodes, H.


Bowden, H. W.
Holmes, Horace (Hemsworth)
Richards, R.


Bowles, F. G.
Houghton, Douglas
Roberts, Rt. Hon. A.


Braddock, Mrs. Elizabeth
Hoy, J. H.
Ross, William


Brockway, A. F.
Hubbard, T. F.
Royle, C.


Brook, Dryden (Halifax)
Hudson, James (Ealing, N.)
Shackleton, E. A. A.


Broughton, Dr. A. D. D.
Hughes, Hector (Aberdeen, N.)
Shinwell, Rt. Hon. E.


Brown, Rt. Hon. George (Belper)
Hynd, H. (Accrington)
Short, E. W.


Brown, Thomas (Ince)
Irvine, A. J. (Edge Hill)
Silverman, Sydney (Nelson)


Burke, W A.
Irving, W. J. (Wood Green)
Simmons, C. J. (Brierley Hill)


Burton, Miss F. E.
Isaacs, Rt. Hon. G. A.
Skeffington, A. M.


Butler, Herbert (Hackney, S.)
Janner, B.
Slater, Mrs. H. (Stoke-on-Trent)


Carmichael, J.
Jay, Rt. Hon. D. P. T.
Slater, J. (Durham, Sedgefield)


Castle, Mrs. B. A.
Jeger, George (Goole)
Smith, Ellis (Stoke, S.)


Clunie, J.
Jeger, Dr. Santo (St. Pancras, S.)
Snow, J. W.


Coldrick, W.
Jones, David (Hartlepool)
Sorensen, R. W.


Collick, P. H.
Jones, Frederick Elwyn (West Ham, S.)
Soskice, Rt. Hon. Sir Frank


Corbet, Mrs. Freda
Jones, Jack (Rotherham)
Sparks, J. A.


Cove, W. G.
Keenan, W.
Steele, T.


Craddock, George (Bradford, S.)
Key, Rt. Hon. C. W
Stokes, Rt. Hon. R. R.


Crosland, C. A. R.
King, Dr. H. M.
Strauss, Rt. Hon. George (Vauxhall)


Crossman, R. H. S.
Kinlay, J.
Stross, Dr. Barnett


Cullen, Mrs. A.
Lee, Miss Jennie (Cannock)
Summerskill, Rt. Hon. E


Daines, P.
Lever, Leslie (Ardwick)
Swingler, S. T.


Dalton, Rt. Hon. H.
Lewis, Arthur
Sylvester, G. O.


Darling, George (Hillsborough)
Lindgren, G. S.
Taylor, Bernard (Mansfield)


Davies, Ernest (Enfield, E.)
Lipton, Lt.-Col. M.
Taylor, John (West Lothian)


Davies, Harold (Leek)
Logan, D. G.
Taylor, Rt. Hon. Robert (Morpeth)


Davies, Stephen (Merthyr)
McGhee, H. G.
Thomas, Ivor Owen (Wrekin)


de Freitas, Geoffrey
McGovern, J.
Thomson, George (Dundee, E.)


Deer, G.
McInnes, J.
Thornton, E.


Delargy, H. J.
McKay, John (Wallsend)
Timmons, J.


Dodds, N. N.
McLeavy, F.
Tomney, F.


Donnelly, D. L.
MacPherson, Malcolm (Stirling)
Turner-Samuels, M.


Driberg, T. E. N.
Mallalieu, J. P. W. (Huddersfield, E.)
Ungoed-Thomas, Sir Lynn


Dugdale, Rt. Hon. John (W. Bromwich)
Mann, Mrs. Jean
Viant, S. P.


Ede, Rt. Hon. J. C.
Manuel, A. C.
Wade, D. W.


Edelman, M.
Marquand, Rt. Hon. H. A.
Wallace, H. W.


Edwards, Rt. Hon. John (Brighouse)
Mason, Roy
Wells, Percy (Faversham)


Edwards, W. J. (Stepney)
Mayhew, C. P.
Wells, William (Walsall)


Evans, Albert (Islington, S. W.)
Messer, Sir F.
Wheatley, Rt. Hon. John


Evans, Stanley (Wednesbury)
Mikardo, Ian
Wheeldon, W. E.


Fernyhough, E.
Mitchison, G. R.
White, Mrs. Eirene (E. Flint)


Flelcher, Eric (Islington, E.)
Monslow, W.
White, Henry (Derbyshire, N. E.)


Follick, M.
Moody, A. S.
Whiteley, Rt. Hon. W.


Foot, M. M.
Morgan, Dr. H. B. W.
Wigg, George


Forman, J. C.
Morley, R.
Wilcock, Group Capt. C. A. B.


Freeman, John (Watford)
Morrison, Rt. Hon. H. (Lewisham, S.)
Wilkins, W. A.


Gaitskell, Rt. Hon. H. T. N.
Moyle, A.
Willey, F. T.



Mulley, F. W.
Williams, Rt. Hon. Thomas (Don V'll'y)


Gibson, C. W.
Nally, W.
Williams, W. R. (Droylsden)


Glanville, James
Neal, Harold (Bolsover)
Williams, W. T. (Hamersmith, S.)


Gordon-Walker, Rt. Hon. P. C.
Noel-Baker, Rt. Hon. P. J
Winterbottom, Ian (Nottingham, C.)


Greenwood, Anthony (Rossendale)
Oliver, G. H.
Winterbottom, Richard (Brightside)


Grey, C. F.
Orbach, M.
Woodburn, Rt. Hon A.


Griffiths, Rt. Hon. James (Llanelly)
Oswald, T.
Wyatt, W. L.


Griffiths, William (Exchange)
Padley, W. E.
Yates, V. F.


Grimond, J.
Palmer, A. M. F.
Younger, Rt. Hon. K.


Hale, Leslie
Pannell, Charles



Hall, Rt. Hon. Glenvil (Colne Valley)
Pargiter, G. A.
TELLERS FOR THE AYES:


Hall, John T. (Gateshead, W.)
Parker, J.
Mr. Kenneth Robinson and


Hamilton, W W.
Peart, T. F.
Mr. James Johnson.




NOES


Aitken, W. T.
Banks, Col. C.
Boothby, Sir R. J. G.


Allan, R. A. (Paddington, S.)
Barber, Anthony
Boyd-Carpenter, J. A.


Alport, C. J. M.
Baxter, A. B.
Boyle, Sir Edward


Amery, Julian (Preston, N.)
Beamish, Maj. Tufton
Braithwaite, Sir Albert (Harrow, W.)


Amory, Heathcoat (Tiverton)
Bell, Ronald (Bucks, S.)
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)


Anstruther-Gray Major W. J.
Bennett, F. M. (Reading, N.)
Bromley-Davenport, Lt.-Col. W. H.


Ashton, H. (Chelmsford)
Bennett, Dr. Reginald (Gosport)
Brooke, Henry (Hampstead)


Assheton, Rt. Hon. R. (Blackburn, W.)
Bennett, William (Woodside)
Brooman-White, R. C.


Astor, Hon. J. J.
Bevins, J. R. (Toxteth)
Browne, Jack (Govan)


Baldock, Lt.-Cmdr. J. M.
Birch, Nigel
Buchan-Hepburn, Rt. Hon. P. G. T.


Baldwin, A. E
Bishop, F. P.
Bullus, Wing Commander E. E.







Burden, F. F. A.
Hyde, Lt.-Col. H. M.
Peyton, J. W. W


Butcher, Sir Herbert
Hylton-Foster, H. B. H.
Pitman, I. J.


Bulter, Rt. Hon. R. A. (Saffron Walden)
Jenkins, Robert (Dulwich)
Pill, Miss E. M.


Campbell, Sir David
Johnson, Eric (Blackley)
Powell, J. Enoch


Carr, Robert
Johnson, Howard (Kemptown)
Price, Henry (Lewisham, W.)


Cary, Sir Robert
Jones, A. (Hall Green)
Prior-Palmer, Brig. O. L.


Channon, H.
Joynson-Hicks, Hon. L. W
Profumo, J. D.


Clarke, Col. Ralph (East Grinstead)
Kaberry, D.
Raikes, Sir Victor


Clyde, Rt. Hon. J. L.
Kerr, H. W.
Rayner, Brig. R.


Colegate, W. A.
Lambton, Viscount
Rees-Davies, W. R.


Cooper, Sqn. Ldr. Albert
Lancaster, Col. C. G.
Remnant, Hon. P.


Cooper-Key, E. M.
Langford-Holt, J. A.
Renton, D. L. M.


Craddock, Beresford (Spelthorne)
Law, Rt. Hon. R. K.
Roberts, Peter (Heeley)


Crosthwaite-Eyre, Col. O. E
Leather, E. H. C.
Robinson, Roland (Blackpool, S.)


Crouch, R. F.
Legge-Bourke, Maj. E. A. H.
Rodgers, John (Sevenoaks)


Crowder, Sir John (Finchley)
Legh, Hon. Peter (Petersfield)
Ropner, Col. Sir Leonard


Cuthbert, W. N.
Lennox-Boyd, Rt. Hon. A. T.
Russell, R. S.


Darling, Sir William (Edinburgh, S.)
Lindsay, Martin
Ryder, Capt. R. E. D.


Deedes, W. F
Linstead, Sir H. N.
Salter, Rt. Hon. Sir Arthur


Digby, S. Wingfield
Lloyd, Maj. Sir Guy (Renfrew, E.)
Scott, R. Donald


Dodds-Parker, A. D.
Lloyd, Rt. Hon. Selwyn (Wirral)
Scott-Miller, Cmdr. R.


Donaldson, Cmdr. C. E. McA
Lockwood, Lt.-Col. J. C
Simon, J. E. S. (Middlesbrough, W.)


Doughty, C. J. A.
Longden, Gilbert
Smithers, Peter (Winchester)


Douglas-Hamilton. Lord Malcolm
Low, A. R. W.
Smithers, Sir Waldron (Orpington)


Drayson, G. B.
Lucas, Sir Jocelyn (Portsmouth, S.)
Smyth, Brig. J. G. (Norwood)


Drewe, Sir C.
Lucas, P. B. (Brentford)
Snadden, W. McN.


Duncan, Capt. J. A. L
Lucas-Tooth, Sir Hugh
Spearman, A. C. M.


Eccles, Rt. Hon. Sir D. M
McAdden, S. J.
Speir, R. M.


Elliot, Rt. Hon. W. E.
McCallum, Major D.
Spens, Sir Patrick (Kensington. S.)


Fell, A.
McCorquodale, Rt. Hon. M. S
Stanley, Capt. Hon. Richard


Finlay, Graeme
Mackeson, Brig. H. R.
Steward, W. A. (Woolwich, W.)


Fisher, Nigel
McKibbin, A. J.
Stewart, Henderson (Fife, E.)


Fleetwood-Hesketh, R. F.
Mackie, J. H. (Galloway)
Stoddart-Scott, Col. M.


Fletcher-Cooke, C.
Maclay, Rt. Hon. John
Storey, S.


Ford, Mrs. Patricia
Maclean, Fitzroy
Strauss, Henry (Norwich, S.)


Fraser, Sir Ian (Morecambe & Lonsdale)
Macleod, Rt. Hon. Iain (Enfield, W.)
Studholme, H. G.


Galbraith, Rt. Hon. T. D. (Pollok)
MacLeod, John (Ross and Cromarty)
Summers, G. S.


Galbraith, T. G. D. (Hillhead)
Macpherson, Niall (Dumfries)
Sutcliffe, Sir Harold


George, Rt. Hon. Maj. G. Lloyd
Maitland, Patrick (Lanark)
Taylor, Charles (Eastbourne)


Godber, J. B.
Manningham-Buller, Sir R. E.
Taylor, William (Bradford, N.)


Gomme-Duncan, Col. A.
Markham, Major Sir Frank
Thomas, Rt. Hon. J. P. L. (Hereford)


Gough, C. F. H.
Marlowe, A. A. H.
Thomas, Leslie (Canterbury)


Gower, H. R.
Marplot, A. E.
Thomas, P. J. M. (Conway)


Graham, Sir Fergus
Marshall, Sir Sidney (Sutton)
Thompson, Kenneth (Walton)


Gridley, Sir Arnold
Maude, Angus
Thompson, Lt.-Cdr. R. (Croydon, W.)


Grimston, Hon. John (St. Albans)
Maudling, R.
Thorneycroft, Rt. Hn. Peter (Monmouth)


Grimston, Sir Robert (Westbury)
Maydon, Lt.-Comdr. S. L. C.
Thornton-Kemsley, Col. C. N.


Hall, John (Wycombe)
Medlicott, Brig. F.
Tilney, John


Harden, J. R. E.
Mellor, Sir John
Touche, Sir Gordon


Harris, Frederic (Croydon, N.)
Molson, A. H. E.
Turner, H. F. L


Harrison, Col. J. H. (Eye)
Monckton, Rt. Hon. Sir Walter
Turton, R. H.


Harvey, Air Cdre. A. V. (Macclesfield)
Morrison, John (Salisbury)
Vane, W. M. F.


Harvey, Ian (Harrow, E.)
Mott-Radclyffe, C. E.
Vaughan-Morgan, J. K


Harvie-Watt, Sir George
Nabarro, G. D. N.
Vosper, D. F.


Hay, John
Neave, A. M. S
Wakefield, Edward (Derbyshire, W.)


Heath, Edward
Nicholls, Harmar
Wakefield, Sir Wavell (St. Marylebone)


Henderson, John (Cathcart)
Nicholson, Godfrey (Farnham)
Walker-Smith, D. C.


Higgs, J. M. C.
Nicolson, Nigel (Bournemouth, E.)
Ward, Hon. George (Worcester)


Hill, Dr. Charles (Luton)
Nield, Basil (Chester)
Ward, Miss I. (Tynemouth)


Hill, Mrs. E. (Wythenshaw)
Noble, Cmdr. A. H. P
Waterhouse, Capt. Rt. Hon. C.


Hinchingbrooke, Viscount
Nugent, G. R. H.
Webbe, Sir H. (London & Westminster)


Hirst, Geoffrey
Oakshott, H. D.
Wellwood, W.


Holland-Martin, C. J
Odey, G. W.
Williams, Gerald (Tonbridge)


Hope, Lord John
O'Neill, Phelim (Co. Antrim, N.)
Williams, Sir Herbert (Croydon, E.)


Hornsby-Smith, Miss M. P.
Orr, Capt. L. P. S.
Williams, Paul (Sunderland, S.)


Horobin, I. M.
Orr-Ewing, Charles Ian (Hendon, N.)
Williams, R. Dudley (Exeter)


Howard, Hon. Greville (St. Ives)
Orr-Ewing, Sir Ian (Weston-super-Mare)
Wills, G.


Hudson, W. R. A. (Hull, N.)
Osborne, C.
Wilson, Geoffrey (Truro)


Hulbert, Wing Cdr. N. J.
Partridge, E.
Wood, Hon. R.


Hutchinson, Sir Geoffrey (Ilford, N.)
Peake, Rt. Hon. O.



Hutchison, Lt.-Com. Clark (E'b'rgh, W.)
Peto, Brig. C. H. M
TELLERS FOR THE NOES:




Major Conant and Mr. Redmayne.

Clause 4.—(REDUCTION OF MECHANICALLY PROPELLED VEHICLES DUTY IN RESPECT OF CERTAIN MOTOR-CYCLE COMBINATIONS.)

6.45 p.m.

Mr. Mulley: I beg to move, in page 3, line 24, to leave out "two hundred and fifty," and to insert "five hundred."

Mr. Speaker: Perhaps it would be convenient to take this Amendment and the next two together.

Mr. Mulley: Yes, Mr. Speaker, I was going to suggest that, with your permission and that of the House, we should discuss this Amendment together with the next two Amendments, that in page 3,


line 28, leave out from "£1 5s. 0d.," to "they," in line 29, and insert "wherever," and that in page 3, line 30, at end, insert:
in the first column after the words 'exceeds 250 cubic centimetres' there were inserted the words 'but does not exceed 500 cubic centimetres' and in the first, second and third columns after sub-paragraph (c) there were inserted respectively the following words and figures, namely in the first column '(d) exceeds 500 cubic centimetres,' in the second column '£3 15s. 0d.,' and in the third column '£1 5s. 0d.' 
I do not apologise for taking up the time of the House on what may appear to be a very small point because in my view it is really a matter of very considerable consequence. However, it may be of some consolation to hon. Members to know that I do not intend to take anything like 30 minutes in putting forward my arguments on the matter.
The purpose of the Clause was stated by the Financial Secretary during the Second Reading debate when he said:
Clause 4 makes a small reduction in the small duty payable where sidecars are attached to lower or medium-sized motor bicycles. That is a small contribution to road safety. I understand that it is safer to travel on a sidecar than on a pillion."—[OFFICIAL REPORT, 7th May, 1953; Vol. 515, c. 584.]
We entirely endorse the desirability of reducing motor-cycle accidents, but our case is simply that the kind of motorcycle that should be encouraged to fit a sidecar is not included in this concession at all. The figures given by the Financial Secretary show that there are 1,200 motor-cycles of 250 c.c. which are fitted with sidecars. I wonder whether the hon. Gentleman has discovered how many of them are so fitted purely for the purpose of carrying a small child or even a baby.
From my own very limited mechanical knowledge, I do not think that many of these motor-cycles are capable of pulling a sidecar. My hon. Friend the Member for Leeds, West (Mr. Pannell), who, unfortunately, is not present, said, speaking with much greater technical authority, that to encourage the fitting of sidecars to small motor-cycles is not only mechanically undesirable, but has very unfortunate consequences for the design of the machine, and, far more important still, increases the danger on the road.
I think it will interest the House if I quote a passage from remarks made on this subject by Mr. Granville, Director

of Road Research of the Department of Scientific and Industrial Research, as reported in "The Times" of Friday last. He said:
A motor-cyclist is about 50 times as likely to be killed—per mile driven—as a car driver. In 1952, the cost of motor-cycle accidents to the community, making no allowance for human suffering, was about £45 million.
Quite clearly, the case for improving road safety by encouraging motor-cyclists to fit sidecars is absolutely made out.
Mr. Glanville went on to say:
Solo motor-cycles are far more dangerous than machines with sidecars. From a strictly national economic angle it would, it appears, pay us to fit all motor-cycles of over 250 c.c. with sidecars free of cost to the motor-cyclists. Not every motor-cyclist would wish to ride with a sidecar, but any encouragement to motor-cyclists to fit sidecars should prove to be a move in the direction of reducing accidents.
I would not go so far as to suggest that the Treasury should present motorcyclists with free sidecars, but I hope that the Financial Secretary will take note of the very important point that it is only machines of over 250 c.c. which should be so fitted.
If the Amendment is accepted, the effect will be that the class of motor-cycle which most needs to be encouraged to fit a sidecar in the interests of safety will have the advantage that the Financial Secretary claimed would be the case in his Second Reading speech. I do not know what the cost will be of extending the concession from 250 c.c. to 500 c.c. but I am sure it will be nowhere near the £45 million that it is claimed motor-cycle accidents cost the community, and it will be very much less than the cost of giving people free sidecars, as this gentleman suggests should be done in the interests of road safety.
I wonder what sort of consultations the Treasury had with the people concerned with road safety before arriving at the figure 250 c.c. given by the Financial Secretary? Were the Road Research Department consulted, or the Ministry of Transport? What consultations did the Financial Secretary have with the trade when fixing the figure at 250 c.c., and with what organisations of motorcyclists? It may seem irrelevant to suggest to the Treasury to have this kind of consultation, but with practically every other taxation proposal we meet the answer, "We cannot move now, because


we must have a Royal Commission on this point." In this very vital matter of road safety a good deal could be done at very little cost if the Amendment were accepted.
I hope that the Financial Secretary will be able to make a record short speech, since time is pressing, by saying that he is in a position to accept the Amendment.

Mr. Anthony Crosland: I beg to second the Amendment.
It does not seem possible that right hon. Gentlemen on the Government Front Bench, who are not themselves physical lightweights, should be in favour of limiting this concession to lightweight motorcycles, and I urge them to extend the concession to sidecars that are pulled by motor-cycles of heavier power. The argument in favour of limiting this sidecar concession to the lighter motor-cycle could take one of two forms. It could mean that the sidecar drawn by the motor cycle of 250 c.cs. was very much safer than a sidecar drawn by the heavier cycle. On the other hand, anyone who knows anything about motor-cycles will be aware that the heavier machine combined with the sidecar is very much safer than the lightweight motor-cycle.
The only other argument that has been put forward is the one advanced by the Financial Secretary when we raised this subject in Committee. He then said that the reason the concession was confined to the lightweight machines was that the special sidecar duty, as it existed before the concession, was something of a deterrent in the case of the light machines because it was heavier in relation to the duty upon the machine itself than in the case of heavier machines. The light machine pays a smaller duty than the heavier machine, so that the sidecar duty of 25s. was a heavier deterrent than in the case of the heavier machine.
I suggest to the Financial Secretary that the argument he put to the Committee was not quite sound. In the first place, as my hon. Friend the Member for Sheffield, Park (Mr. Mulley) argued in Committee from a great wealth of technical knowledge, the real deterrent to putting a sidecar on a small cycle was that a small motor-cycle was hardly strong enough to pull the thing. The deterrent was therefore, not a financial one at all, but a technical one. Even if the argument of the

Financial Secretary were true, that there was a heavier deterrent in the case of a lightweight motor-cycle because of the higher proportion of the sidecar duty, it is not the case that nothing could be done to encourage combinations being attached to a heavier motor-cycle. Even if there is a heavier deterrent in the case of 250 c.c. cycles, it does not follow that there is no deterrent in the case of the heavier ones; there might be an overwhelming deterrent in the case of the smaller motorcycles, yet still a quite powerful one in the case of the rather heavier machine.
We take the view that the road safety argument applies to all motor-cycles, and indeed, particularly to the heavier cycles, and that there must, therefore, be a a stronger case on the grounds of road safety for extending this concession from its limit of 250 c.cs. to the 500 c.c. machine. I hope that we may have a sympathetic reply from the Financial Secretary.

Mr. Boyd-Carpenter: The fact that there is real sympathy with the point of view which has been so admirably, and with such admirable brevity expressed by the two hon. Members is indicated by the presence of Clause 4. The intention is to provide for the removal of a certain amount of discouragement in the use of sidecars.
As has been very properly pointed out, the Clause limits this particular concession to sidecars attached to motor-bicycles up to a cubic capacity of 250 c.cs. The argument for so confining it is largely that the deterrent is the greater where the charge of duty for the use of the sidecar constitutes a much bigger proportion of the total cost than is the case higher up the scale. That is beyond doubt.
Indeed, before the change proposed in the Clause, for the small class of motorcycle up to 150 c.cs. the charge of 25 s. for the sidecar exceeded that for the motor-bicycle itself and in the next band, up to 250 c.cs., the 25s. was a rather large proportion of the duty of the motor-cycle itself, which was 27s. 6d. It is common knowledge that these latter are cheaper machines, used by those who can spend less on this particular form of transport. I should have thought it was reasonable to assume that the duty on the sidecar should be rather less than that on the motor-cycle itself.
It was suggested in Committee, and has been suggested again this afternoon, that it was rather inappropriate to encourage the use of sidecars for these light motorcycles. I shall not claim any expertise in motor-cycling. On the last occasion we exchanged mutual reminiscences. It is, of course, the fact that hundreds of our fellow citizens overcome the mechanical difficulties which, it was suggested in the Committee, arose. What I think is overlooked is that included in this category of light motor-cycle is the assisted bicycle, which is rapidly coming more into use. These machines can carry a sidecar.
The number of sidecars for them has risen to 581 in the last year and it is not an unusual spectacle to see someone taking the baby to the local park or cinema in this way, which is much safer for the baby. A sidecar is a practical proposition for one of these machines. These are the machines where the rate of duty is less than it was on the sidecar when this Clause was produced, and it seemed reasonable to begin with these low-powered machines. Sidecars are used much less with low-powered than with high-powered machines. That being so, I should have thought it was reasonable to try some stimulus first in this area.
I do not want to seem dogmatic in this matter because, as I said in the Committee, this concession is experimental. One difficulty is that it is designed not to come into force until 1st January next year, and, therefore, we have no more mechanical evidence as to how the experiment will work than we had put to us in the Committee.
7.0 p.m.
It may perhaps serve to reassure the two hon. Members, however, if I read to them what was said in Committee on 19th May:
We think that this is an appropriate place at which to begin and on which to judge the effect. Therefore, for this year at any rate, this is a reasonable beginning. I can undertake that we will watch the position and watch, in particular, whether there is an effect in this sphere of the sort which we would like to see, and we will consider in the light of that whether perhaps next year a move in the direction which the hon. Member suggests may not be warranted.
I do not think this is more than an experimental concession. I think the sensible thing is to put it into operation and judge by the results."—[OFFICIAL REPORT, 19th May, 1953; Vol. 515, c. 1971.]

I think that that indicates what is our point of view.
In the nature of things we cannot have proceeded any further with the experiments since the Committee stage, and I think that the sensible thing to do is to put this provision into operation and judge any further action by the results. I ask hon. Members not only to accept that point of view, but to accept that we have taken the initiative by putting this Clause into the Bill, that we are aware of the important aspects of this matter, and that my right hon. Friend is taking a sensible and intelligent interest in it.

Mr. Mulley: We are grateful for the assurance that the Government will at least keep this matter under review, but it is not a matter for satisfaction that since the Committee and the Report stages the Financial Secretary has not taken the trouble to inquire from motor-cyclists and the Ministry of Transport—

Mr. Speaker: Order. The hon. Member is making a second speech.

Mr. Mulley: I thought that I could make a short speech to show that we intended to withdraw the Amendment, Sir.

Mr. Speaker: Then the hon. Member must be very brief.

Mr. Mulley: On the understanding that the Chancellor will look again at this question next year I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 5.—(EXEMPTION FROM ENTERTAINMENTS DUTY OF CERTAIN AMATEUR SPORTS AND ENTERTAINMENTS.)

Mr. Speaker: I think that the first three Amendments to this Clause can be considered together.

Mr. Rhodes: I beg to move, in page 4, line 10, after "capacity," to insert:
or as a conductor or member of the orchestra taking part together with other persons in the entertainment.
As you suggest, Mr. Speaker, I propose also to deal with the two following Amendments. The first is in line 11, to leave out from "section," to the end of the subsection, and to insert:
the words 'other than a conductor or a member of an orchestra taking part together with other persons in the entertainment' shall be inserted after the words 'any of the performers '.


The second is in line 11, to leave out from "section," to the end of the subsection, and to insert:
the words 'other than a conductor or a member of an orchestra taking part together with other persons in the entertainment' shall be inserted after the words 'any of the performers':
Provided that no person shall by reason of this subsection be liable to pay any more tax than he would have been liable to pay if this subsection had not been passed.

These Amendments are intended to enable amateur operatic societies to pay a conductor and an orchestra. We have discussed this matter and been through all the arguments before, and I do not think that we need repeat them now. I should have been very diffident about putting the Amendments on the Order Paper at all if we had not had any fresh evidence by means of which we hope to persuade the Chancellor to give us the little more that we want now.

The Chancellor mentioned concessions last year, and that was after the disclosure to the House that the amount of tax that the Chancellor was receiving was only £10,000. If the concession meant anything at all in the way of tax it came out of the £10,000. So if we give the Chancellor the benefit of £2,500 there is only a sum of £7,500 now between us. We have some fresh evidence. I have submitted it to him and so has the Musicians' Union.

The argument has always been put forward that somehow or other there would be difficulty about those who work in the professional theatre, but the Musicians' Union is one of the strongest unions in the theatrical profession, and they have set out their views in a letter which their general Secretary has sent to the Chancellor. The letter states:
Having had an opportunity for studying HANSARD (19th May) on the Commons debate on Entertainments Duty as it affects Amateur Operatic Societies, we thought it might prove of some help if we submitted our views on the subject.
Many of our members are accustomed to being engaged by amateur societies, either as instrumentalists or conductors, and it will undoubtedly be to their disadvantage if it is made financially impracticable for the societies to continue employing them, or, at least, financially advantageous to employ amateur musicians and conductors in their stead. Furthermore, a widespread change of this kind, in the musical backing given to amateur societies, would result in a detrimental effect from the cultural point of view. It must be

appreciated that very few amateur instrumentalists or conductors achieve the standard of professionals.
We think that to differentiate between professional producers and conductors will be quite unfair to the amateur societies, because there is no fundamental difference in the importance of their respective responsibilities. Each of them is in charge of a 'department' that can really be managed adequately by an amateur.
In the orchestra itself there are a number of instruments that are seldom played by amateur musicians, consequently, if an adequate musical performance is to be provided by the amateur societies, they are compelled to employ professionals. It would indeed seem unjust if, through no fault of their own, the societies were penalised for this reason. We are aware, of course, that this point was well covered during the Parliamentary debate.

There goes one of the last remaining objections to what we have been contending.

I appeal to the Minister to give us that little extra and to wipe out this tax altogether. It only means about £7,500. It does not take the pay of many civil servants to cost £7,500 a year. Throughout the whole length and breadth of the country the Government will be thanked if they make this concession and I appeal to them to help the amateur movement in this way.

Mr. Thomas Steele: I beg to second the Amendment.
I should like to add my support to what my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) has said. In reply to the earlier debate on a new Clause the Financial Secretary to the Treasury said that there was really nothing new to say about that matter, but I feel that it is constant dripping that wears away the stone. There is little left of the stone in this case and we hope that this last drop tonight will wear it all away.
It seems to me that since the last concession was made we have placed the operatic side of the amateur world in a difficulty. The amateur drama side receives the concession even though the instructor may be a professional. Throughout Scotland, and England and Wales, there is a great deal of amateur drama and every village is alive to what is happening. The amateur dramatic societies are entitled to the concession and it is they who make a profit. Amateur opera performances, on the


other hand, are much more expensive. Those connected with them are very enthusiastic but they do not receive the concession and they make a loss. I hope that the criterion is not that if one makes a profit one receives the concession but if one makes a loss one has to pay the tax. That is certainly what is happening.
I have been in correspondence with the Financial Secretary with regard to the Helensburgh Amateur Operatic Society in my own constituency. They have been attempting to obtain relief of tax on educational grounds, but every time they put forward a claim they find that the Income Tax authorities shift their ground, and so far they have been unsuccessful. The experience of this society is one which can be repeated all over the country. Helensburgh is a beautiful place. Unfortunately it has only a small hall with a seating capacity of 480. An admission charge of 5s. is made, which is a fairly large sum for people to pay. But this year the society feel the price must be increased.
The enthusiasm of the society can be gathered from the fact that the members pay a yearly subscription and many of their own expenses. Each year the society has a deficit and would not be able to survive except for the proceeds of jumble sales and dances and events of that kind. Last year the deficit was £250, which so far the society has not been able to meet. Under the Act as it stands, because the society has a professional conductor and one or two professional members of the orchestra, it is not entitled to a concession. It is difficult to get the orchestral parts until shortly before the performance and it would be asking too much for amateurs to be ready to perform in such a short time, the society says.
I reinforce what has been said by my hon. Friend about the Professional Musicians' Union. Previously the society employed 12 professional musicians but this year they will be employing only six. I hope that we shall have a favourable reply from tie Economic Secretary and be able to inform amateur societies throughout the country that at long last they are entitled to this small concession from the Treasury.

Mr. Maudling: I am sorry that I have once more to disappoint the hon. Member for Dunbartonshire, West (Mr. Steele). The discussion in Committee was followed by a Division, in which the Government majority fell even lower than the previous time when I replied to a discussion in the House, so I broke my previous record.
As has been said, there is one new development, about which I would say a word. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) referred to a letter from the Musicians' Union and it appears that there has been some misunderstanding on the part of the union. In their letter they refer to the fact that their members are engaged by amateur operatic societies and expressed concern that it is now to the financial advantage of the societies to employ amateur musicians and conductors in their stead. It seems as if the union have the impression that a change has been make in the tax conditions. In fact, no change has been made. That is the objection of hon. Members opposite.
The position is that amateur societies can gain exemption from tax either under the charitable provisions or the partly educational provisions, both of which are extensive. This provision was designed to enable the purely amateur society to gain the benefit of tax exemption without having to go through the more complicated and difficult conditions attaching to the partly educational and the charitable schemes. If it is proposed to give a special position to amateur societies we must define what is an amateur society and the conditions which distinguish an amateur society from a professional society.
As I explained in Committee, we felt that the only clear distinction in logic was between a society which had professionals in the performance and the society which had no professionals in the performance, though they might have professionals to assist in putting on the performance, as producer, and so on. But once professionals are engaged in the actual performance we cannot see how we can arrive at a satisfactory dividing line between the amateur and the professional performance.
Stress was laid on the position of the conductor. I think hon. Members would agree that while some societies are short


of conductors other societies may be short of performers. The hon. Member for Dunbartonshire, West referred to a local society which employs a certain number of professional musicians. In Committee my right hon. Friend said:
I cannot give an undertaking that I can find the solution before the Report stage. I should be deluding hon. Members if I told them there was an easy way out. We considered this question fully before the Committee stage. I will undertake to study the speeches that have been made and that I know have been made sincerely."—[OFFICIAL REPORT, 19th May, 1953; Vol. 515, c. 1999.]
We have considered this again, but I regret that we do not, at the moment, see any way of laying down clearly what qualifies for amateur exemption other than saying there should be no professionals in the performance itself.

7.15 p.m.

Mr. Steele: What we are saying, in effect, is that the conductor is not in the same category as performers on the stage.

Mr. Maudling: It would be difficult to distinguish between the conductor and a performer on the stage or a performer in the orchestra pit. Once we admit any professional performer it would be difficult to draw the line.
We are trying to meet this point, but we do not see how a satisfactory distinction may be drawn. We are prepared to go on examining it, with the advice of hon. Members, in the hope of being able to find a satisfactory solution. But at present, despite the further consideration which we have given to this matter since the Committee stage, we do not feel that we can accept this Amendment.

Mr. R. E. Winterbottom: I am very disappointed with the reply of the Economic Secretary. Most amateur societies in the country perform a useful educational and cultural function and they, too, will be disappointed.
The Economic Secretary said that an amateur society may receive exemption from entertainments tax if it satisfies the condition imposed by the Treasury as either part-educational or part-cultural. What he failed to say was that few amateur societies managed to satisfy the Treasury in this way. There is the

curious anomaly, which has never yet been explained, as to why there should be exemption from entertainments tax for a purely professional theatre performance of a non-profit making kind and yet an amateur performance, in which one professional takes part in the person of a conductor, should be taxed.
It is possible for a wholly professional cast, with a full orchestra led by a professional conductor, to obtain relief from entertainments tax because their performance is classified as educational and non-profit making. In this guise a performance of J. B. Priestley's "Music at Night" may be given with an orchestra on the stage. It is possible to go further and present either a semi-or a wholly salacious play in London under the same conditions. The nonprofit making concern of Tennents put on "Forever Amber" and it is possible to present, "No Orchids for Miss Blandish" or "Tobacco Road" or some such salacious play.
While plays of doubtful morality may be presented as educational plays and escape the tax, amateurs, supplying a cultural need who happen to engage one professional, have to pay tax. An amateur concern, such as one of the famous amateur choirs that we have in various parts of the north of England, who regularly employ one paid conductor and perform most of their work from a cultural aspect to satisfy the needs of the district, is charged Entertainments Duty, whereas the fully professional theatre gets away with it.
I want to make it clear that I approve of the Treasury provisions for semi-educational, wholly educational and cultural pursuits, but I believe that although that is right, it is wrong then to deny this exemption to the amateur stage, operatic society or choir which is so popular especially in the north of England. I bring these matters to the attention of the Economic Secretary, and until he answers these questions that I have put I believe the amateurs of this country will be disgusted with the attitude of the Government.

Mr. Mitchison: I propose to say very little because I am not good at music. I have, however, been to operas and I have found no difficulty whatever in distinguishing between the operatic artists,


whose names, incidentally, are so well advertised, and those people who sit in the orchestra pit and play a very necessary part in the performance.
An hon. Friend of mine is reputed once to have said to an audience that somebody or other was clinging by his eyelashes to the last crevasse of Tory reaction. That was, I am sure the Economic Secretary will agree, a magnificent phrase, although I do not for this purpose accept "Tory reaction" as quite the appropriate phrase. But he is very near to clinging by his eyelashes to the last crevasse—

Mr. Maudling: I would remind the hon. and learned Gentleman that there has been considerable Tory progress from what was the state of the law two years ago.

Mr. Mitchison: I am very glad to hear it, and I welcome it, but I do suggest that the Economic Secretary has now got into a position of trying to defend the last small concession which would complete the picture.
After all, the only real point about this is to avoid being unfair to the professional element. In this case the professional element wish this to be done, and I think they are perfectly right in their own interests to wish it. We are really coming to this, that simply because this last point cannot be conceded, a number of operatic societies, amateur in essence—the kind of body which ought to be protected and encouraged—will be unable to give their performances without attracting this tax.
I ask the Economic Secretary to look at the matter broadly and to consider what one wants to do. What one wants to do is not merely not to penalise this kind of thing, but to encourage it. That has been said again and again from the Treasury Bench and I entirely accept it. Indeed, the Economic Secretary said much the same just now. I accept that, too. But why not let them have the last little point which would make an enormous difference to them, and which, in terms of revenue, would make practically no difference to the Treasury?
This is really only the kind of obstinacy which one sometimes gets from people when they have been holding ground and have given in; in this case they have given most of it, and somehow or other

human frailty is such that they just will not give the last concession which would make the real difference. We have had few concesssions during these discussions on the Finance Bill. It is a time of night and a time of the proceedings when one might gracefully be made. Very little could be lost.
I would point out to the Economic Secretary that he has the dignity of the Treasury to consider. Look at what will happen if he does not make a concession. In Helensburgh and in other places Her Majesty's Treasury with all its majesty and resources will be depending on the proceeds of jumble sales, bazaars, and so on. It is a pity to be driven to that sort of thing. I suggest that there is no importance or large question involved except the general question of encouraging this kind of performance. I suggest that the hon. Gentleman might think again. It would not lose any money worth speaking of, and it would do a little bit to encourage these amateur activities which are a good thing for the country.

Mr. Hugh Gaitskell: I share the disappointment of my hon. Friends at the Economic Secretary's reply. I must say that, in view of the fact that the Government only won the Division in Committee by four votes and, therefore, there were clearly a large number of abstentions on the Government side, no doubt deliberate, in favour of the amateur societies, I had hoped that they would have brought some pressure to bear on the Government and that we should have had a more satisfactory answer. But there it is. The Government still take the view that they must draw the line where it is drawn at present.
The Economic Secretary will realise that there is a great deal of feeling about this matter. My hon. Friends, if I may say so, have presented the case with great ability and obvious experience. They are not speaking from a brief. They are speaking from their own personal knowledge of these societies and the work that they do; and we all want to encourage them.
I doubt very much whether the particular line drawn by the Economic Secretary and the Treasury is one that can be held. What does the hon. Gentleman say? He is saying, in effect, "This


is all right so long as the professionals are kept in the background, so long as they are not on the stage and are not taking part in the performance." But I can see all sorts of difficulties here. Suppose we have a professional making noises off. Would he be taking part in the performance or not? Suppose the orchestra is hidden away, as they very often are, and is playing only now and again. In some plays—indeed, in some of Shakespeare's plays—there are a few songs and there may be a professional orchestra playing the music. Will the Treasury insist that tax has to be paid on such occasions?
I think that this distinction between who is and who is not taking part in the performance is one that will not stand up to experience. But there it is. The Government have at least said, as I understand, that they will continue to study this question. We hope that they will not be entirely unresponsive to representations that will, no doubt, continue to be made to them. In view of that, although we are extremely dissatisfied, I do not think I would advise my hon. Friends to press this matter on this occasion to a Division, but I must tell the Economic Secretary that we shall certainly, if we possibly can, raise the matter again if the present Government are still in power, which is very doubtful, on next year's Finance Bill.

Amendment negatived.

Clause 12.—(CHANGES IN OLD AGE AND OTHER PERSONAL RELIEFS.)

7.30 p.m.

Mr. Houghton: I beg to move, in page 7, line 42, at the end, to insert:
and to the reference to the age of sixty-five years or upwards in subsection (2) of section two hundred and eleven of the said Act shall be added the words 'or, in the case of a single woman or widow, the age of sixty years'.

This Amendment relates to age relief. At present, a special concession is made to persons who are 65 years of age or, in the case of a married couple, when the husband or wife has reached 65, whereby all their unearned income may be treated as earned income if their income from all sources does not exceed £500 a year. In this Bill the Chancellor proposes to lift the total income limitation to £600 a year, but he is not proposing to make any change with regard

to the age condition. My Amendment proposes, in the case of a single woman or a widow, to reduce the age condition from 65 to 60.

The reason for this proposal is that the ages of retirement of men and women are today different from what they were when age relief was first introduced in 1925. At that time the age of retirement for both men and women under the contributory pension scheme was 65, but the age of retirement for women under the contributory scheme was reduced to 60 during the war and remains at that age today. This retirement age of 60 for a woman and 65 for a man has been taken as a guide to other concessions which relate to the age of retirement.

Post-war credits are repaid when a male taxpayer reaches the age of 65 and a female taxpayer reaches the age of 60, because they are the ages at which retirement pensions are paid. I propose bringing the age relief into line with the general pattern of the differential age of retirement of women and men respectively. There is no need to interfere with the age qualification for married couples, because age relief is given if the husband or wife has reached the age of 65. That seems quite appropriate.

A single woman or a widow, however, has to wait until she is 65, whereas a woman taxpayer can claim her post-war credits at the age of 60, and the retirement age for women in general industrial and commercial life is now put at 60 and not at 65. Since the age relief is really related to retirement, the case for bringing it into line with the contributory pension scheme is very strong. The whole purpose of age relief is to allow those who have had to save money for their old age, and who live on the dividends and interest on any money which they have invested, to regard that as their retirement pension, to take the place of the vocational superannuation which teachers, civil servants, police officers and local government officers have provided for them as part of their conditions of service.

I sincerely hope that we shall hear from the Economic Secretary that his right hon Friend is prepared to make this concession. It is simply expressed in the Amendment. No redrafting is needed between now and a later stage of the Bill. It will be in accordance not only with


tradition but with the expectations of the House that some further concession should be made before we part with the Bill.

I see that in the "Daily Express" this morning there is a critical reference to the Chancellor of the Exchequer. It says that he has given little away during the course of this Bill, and it puts the prefix "battling" before his name. I should not go so far as that—I might use "stonewalling," or a similar negative term—but it is true that we have not had any concessions worth speaking of so far. I always thought that it was part of the tradition of the discussions on the Finance Bill that the Government made concessions from time to time, as a kind of refresher to the Opposition, to save them from languishing and becoming disheartened.

There is an additional reason why the right hon. Gentleman should make this concession. In the "Daily Mirror" this morning, it is announced that a Gallup Poll is to be held on the question of who should succeed the Prime Minister, were he unfortunately obliged to give up his office tomorrow. I see that the Chancellor of the Exchequer is a candidate. He has probably not been nominated by the Conservative Party, but he is on the list for the Gallup Poll. I am sure it would increase his chances of coming near the top of the poll if he were to agree to make this small concession. I hope that this small matter can be adjusted and that we shall not have to spend very long on it.

Mr. Jack Jones: I beg formally to second the Amendment.

Mr. Maudling: The hon. Member for Sowerby (Mr. Houghton) has moved this Amendment in engaging if somewhat unorthodox terms. There is obviously a considerable argument for carrying out this amendment in the tax laws. The position at the moment is that the taxpayer qualifies for age relief whether he is single or married. The single man or woman receives it at the age of 65 and, in the case of a married couple, it is received when either of them attain the age of 65.
The hon. Member's Amendment would mean that a single woman or a widow would be able to claim the relief at the

age of 60. That is in line with the postwar credits position. It is undoubtedly a substantial argument, but there are certain arguments in the other direction. For instance, it is true to say that there is a quite considerable body of opinion which objects to the distinction between the single man and woman with regard to post-war credits. Many people think that that distinction is not easily justified and should not be extended. There is also the difficulty that, under this provision, a single woman would be able to qualify at the age of 60, but the married woman would not be able to do so until she became 65.
This is the sort of amendment to the Income Tax Acts which it might well be a good thing to make on another occasion, but the objection to it at the present moment is the financial one. I am rather surprised to see the figure; it would cost £2 million. To my right hon. Friend's mind, that is a substantial sum. As the hon. Member knows as well as anyone, there are many improvements that could be made in the Income Tax law, over a period of time, none of which should have priority over this one. While not wishing to controvert the facts put before us with regard to this proposal, however, my right hon. Friend does not feel that, this year, he can spare the revenue which would be needed to meet it.

Mr. Gaitskell: I am sorry that the Economic Secretary was not able to announce that the Chancellor had succumbed to the blandishments of my hon. Friend and, in particular, taken advantage of the opportunity to improve his position in the "Daily Mirror" Gallup Poll. The case put forward by my hon. Friend was extremely strong. It does seem rather anomalous that the pension age for single men and widows should be 60; that repayment of postwar credits for similar persons should take place at 60, but that in this particular instance the age should be 65.
The Economic Secretary said nothing to dispel our feeling that it was anomalous. He pointed out that it cost £2 million—which is not a very large sum—and that there were some difficulties about the position of married women. May we take it that at least this is one of the questions which the Royal Commission will be particularly asked to examine in the course


of their discussions? Will the hon. Gentleman draw their attention to it particularly, so that when their Report comes out, which we hope will not be long, this point will be covered? May we have that assurance?

Mr. Maudling: If I may have the leave of the House to speak again, I think it almost certain that the Royal Commission will consider this point because they are considering all these questions. I will certainly bear in mind what the right hon. Gentleman says about the desirability of bringing it specially to their attention.

Amendment negatived.

Mr. Maudling: I beg to move, in page 7, line 42 at the end to insert:
(2) In section two hundred and twelve (children) of the said Act for the reference in paragraph (b) of subsection (3), as amended, to twenty-six pounds (which refers to the limit on the emoluments of a child undergoing training) there shall be substituted a reference to fifty-two pounds.
This is a concession by the Government although, as no doubt the right hon. Member for South Shields (Mr. Ede) will point out, it is not a whole concession. It goes part of the way to meet a point made by hon. Members opposite in Committee—a point which has also been made by my hon. Friends on previous occasions. The argument was that the emoluments limit for apprentice children should be raised from £26 to the £85 granted in the case of the normal child allowance.
During the Committee stage I pointed out that there were two difficulties: first of all, that my right hon. Friend would like to deal comprehensively with questions of personal allowances on the basis of the advice of the Royal Commission; and, secondly, the practical difficulty that if we increased this limit to £85 there would be a large number whose emoluments were just over £85 and there would be unreasonable pressure for the introduction of some "tapering" which would involve, if it were introduced, a substantial increase in administrative costs and the employment of a large number of additional staff.
In Committee I said that if the hon. Member for Newton (Mr. Lee), who had moved the Amendment, would withdraw it, my right hon. Friend would give very close consideration to the possibility of bringing forward an Amendment which would meet the hon. Member's point of

view. I said that I could not give an undertaking by reason of the genuine practical difficulties and the desirability of avoiding doing something in advance of the Royal Commission's report which might prejudice the full value of that report when it was received.
My right hon. Friend considered the position in the light of those practical difficulties and the difficulty about the Royal Commission, and he thought that the best thing he could do to meet the point of view of hon. Members opposite was to move this Amendment, which would raise the sum not to £85 but from £26 to £52—doubling it from 10s. a week to £1 a week. My right hon. Friend considered very carefully whether he could go to the full extent asked by hon. Members opposite, but he regrets that at present he does not feel that he can do so. He has introduced this Amendment to go as far as he feels he can go in present circumstances in the direction suggested in Committee.

7.45 p.m.

Mr. Ede: Judging by what I have heard in listening to the debate yesterday and today, we have now achieved a record. We have got something—not much, and not as much as we asked for, but at any rate something; and to that extent I am grateful to the Government for giving it to us and to the Economic Secretary for the way in which he announced it. But I am not convinced by what he said, that there would have been serious difficulty had he gone to the £85, and he can rest assured that this will not be the last to be heard of the subject.
During the Committee stage, he said that this might be a matter more easily dealt with when we had the report of the Commission which is considering Income Tax, and when that report is received we shall look to see what recommendations they have made in the hope that they may induce the Government to go the whole way. I still base my case for going to £85 on what I said about the need for establishing in this industrial and maritime country a proper respect and standing for those people who are qualifying themselves to become skilled craftsmen and creative designers.
It is quite wrong to think that their education is less important than that of those of us whose tools and stock in trade consist of words. After all, that is the


real difference here, and I suggest that the man who is creating things in stone, wood, or any other material is as much entitled to recognition, if he is undertaking a thorough scheme of training, as is the man who will create things in words. I know that Carlyle regretted that his grandfather built a bridge at—

Sir William Darling: Ecclefechan.

Mr. Ede: I am obliged to the hon. Member for Edinburgh, South (Sir W. Darling), who has saved me from the difficulty of trying to get a Sassenach tongue round a Scottish place name.
Carlyle regretted that whereas he dealt in words his grandfather had built a bridge that would last for centuries. I am afraid that in that case Carlyle's words will probably last rather longer than the bridge which, when I saw it last, did not seem to be carrying the main road traffic.
We are thankful for the small mercies we have received. There was a man who said he had two ways of expressing thanks: if he felt thanks merely as thanks, he said, "Thank you"; but if he felt that he had been generously treated, he said, "Thank you very much." I say, "Thank you."

Captain J. A. L. Duncan: I did not intervene on this subject in Committee this year but I raised the question last year, and I want to thank the Economic Secretary for going part of the way we asked and for doubling the allowance. I entirely agree with the right hon. Member for South Shields (Mr. Ede) that we want to establish the standard for the craftsman in this country just as much as we do for the man of letters.
I want to ask what is meant exactly by the word "emoluments." I know it is defined in Section 212 of the 1952 Act, but there are certain things which it does not include—for instance, books and tools. I do not think the word "emoluments" covers either of those things at the moment, and although it is probably too late to do anything this year I shall be grateful if the Economic Secretary will look into this point. If we raise the

allowance to £52, that may be insufficient, but we could probably make it sufficient if it were a net sum instead of having to exclude such things as tools and books, which I do not think are covered at present.

Mr. Jack Jones: I do not want to delay the House, but I want, on behalf of the trade union element on this side, to express our disappointment about this concession. My disappointment is based on the fact that we are heading for the keenest competition the world has ever known, and it is British craftsmen who will keep this country solvent and make it possible for trade to be maintained at all. We have been very remiss in not granting all that was asked for, which should have been granted on the long-term basis. It may make the difference between encouraging parents to see that their children become highly skilled craftsmen or go into blind alley jobs which may pay bigger wages at first. The latter is a bad policy.
I suggest to the Treasury that the sooner they give this concession the better. It was a small concession which would have brought big results. I am the father of six children, and I can cite my own case. I have four boys and two girls. Three of the boys went to technical colleges and are giving good service in the steel industry. Had they taken notice of some people they would have gone into blind alley jobs, big wage jobs which would have led them nowhere.
The Treasury have been remiss in not giving what has been suggested, which was after careful thought by the trade union element on this side of the House, and, apparently, after careful thought by the employing class on the other side of the House. The hon. and gallant Member for Angus, South (Captain Duncan) was right in suggesting that further encouragement should have been given. As my right hon. Friend the Member for South Shields (Mr. Ede) has said, we are grateful for small mercies but we are not living in an age when small mercies will pull us through. The greatest amount of encouragement should be given to British craftsmen to enable them to make Britain what we want her to be.

Amendment agreed to.

Clause 14.—(RESTORATION AND AMOUNT OF INITIAL ALLOWANCES.)

Mr. Gaitskell: I beg to move, in page 9, line 27, to leave out subsection (2).
We now come to a matter of rather greater substance than the points that we have been discussing in the last half hour. We come back again to the question of initial allowances. We make no apology to the House for raising the matter once more. It is true that during the Committee stage we had a very useful debate and there was, as a result of the debate, considerable clarification about the nature of the initial allowances, about what they could do and what they could not do, but I did not think that the Government reply on that occasion was at all satisfactory. It did not seem to me that the arguments put forward by the Financial Secretary and the Chancellor met the case that we were arguing.
In a sense, what the Financial Secretary had to say was in direct conflict with what his own back benchers were saying. He said that we could not have an increase in the initial allowances to 40 per cent. because it would cost too much and would be a heavy burden on the Exchequer, and he gave figures, which were afterwards added to by the Chancellor, to substantiate that case. On the other hand, the chief argument of his supporters was that the initial allowances were really of no particular value to industry at all, that they brought nothing into industry and would not stimulate industry to undertake more investment, and that it would be far more desirable to have reductions in the tax on undistributed profits. Both cannot be right.
Either the initial allowances mean something to industry, in which case they certainly cost the Treasury something in a sense to which I shall refer in a moment, or they are of no value to industry, in which case no real cost is imposed on the Exchequer. The truth of the matter—on this we had some discussion started by a very able speech from my hon. Friend the Member for Gloucestershire, South (Mr. Crosland)—is that the initial allowances may be regarded as a loan by the Government which is, nevertheless, a continuing loan so long as the rate of initial allowance continues, and there is, therefore, always a certain amount of money outstanding which is not given up wholly and for all

time by the Exchequer, as would be the case with a reduction in the tax on undistributed profits.
There always remains owing to the Exchequer a sum of money which, if the initial allowances were brought to an end, would have to be repaid, and would be repaid in the course of the next few years, subject to the point to which I drew attention during our Committee stage debates that the firms in question would not have to repay the money which was, so to speak, owing to the Treasury if they made losses and thus had no profits out of which to repay it. That is what both the advantage to the firms and the cost to the Exchequer really amount to.
It is arguable that the firms do not get a great deal of benefit out of what is purely a loan, but the fact remains that they do not, so long as the initial allowances continue, have to pay them back, and I think that an interest-free loan which continues indefinitely, is something which most firms would certainly regard as worth having. But, from our point of view, there are essential arguments in favour of the initial allowances as a method of stimulating investment. These are, first, that they are paid only as a consequence of expenditure on plant and machinery and it can, therefore, be taken as certain that such expenditure must take place before the Treasury make whatever concession is involved; and, second, that they go to all firms, whether they are new or old. In that respect, as in the previous respect, they seem to us to have a distinct advantage over a tax concession on undistributed profits which has been so vigorously demanded from the back benches opposite.
There is another difference between these two methods of attempting to stimulate investment which we must bring out. There is no reason for disguising it. In a sense, it follows from what I said earlier, that when the Treasury make a concession on the taxing of undistributed profits there is not only the possibility that the money, or part of it, may be used for increased dividends and thus lead to an increase in consumption. There is also the fact that, even if the whole of it is saved, even if the consequences of the Government giving up £10 million, £20 million, £30 million, £40 million or whatever it may be, is exactly paralleled by a rise in the amount


of undistributed profits left to the firms, nevertheless the firms are better off to that extent for they have a net gain in their assets, whereas in the case of the initial allowances that is obviously not so and they have a liability, although admittedly it is not likely to be a very serious one so long as the initial allowances continue, eventually to repay the money to the Exchequer.
From our point of view, interested as we are in a more equitable distribution of wealth and anxious to produce what seems to us to be a more socially just state of affairs, we frankly prefer the initial allowances, other things being equal, because the consequence is that we get the investment but not the increase in private fortunes. In fact, we get Government investment taking place in the industry. To be frank, that is one of our reasons for preferring initial allowances, and I have little doubt that it is the main reason why the back benchers opposite so much prefer a reduction in the tax on undistributed profits.
I want now to say a word or two about the consequences to the Budget. The Financial Secretary rested his case almost wholly on the cost to the Treasury which the increase in the rate of initial allowances would entail. The only other argument that he put forward was, simply, that initial allowances were not the only way to stimulate investment. As I feel he will agree, that is not really an argument which we can accept as justifying a refusal to consider our proposal. Why is it that we make so little of the argument that the cost to the Treasury is substantial? It is not that we deny that there would be a loss to the Revenue in the strict sense of the word, for that is fully conceded and follows from what I said earlier, so long as the initial allowances continue.
We say, however, that where the initial allowances are granted and the Revenue loses so much in consequence, there is an exactly corresponding increase in the undistributed profits of the companies. There is, in other words, a corresponding increase in corporate savings. If, therefore, as a result of the increase in the initial allowance the Budget surplus is smaller and the amount

of Government savings is correspondingly reduced, that is offset by an increase in company or corporate saving. Therefore, there is no need to fear on that ground alone any inflationary consequences. It is of a different order, for that reason, from the straight-forward taxation concession, even if it be on undistributed profits, which may involve an increase in dividends; so we do not think that the Government need have anxieties on that score.
8.0 p.m.
The Financial Secretary seems to feel that although there might be something in this argument, that it is relevant to talk about matters of inflation and deflation when making up one's mind on what the Budget surplus should be, we cannot really ignore the surplus being smaller. The Chancellor of the Exchequer said much the same thing. I cannot take that argument very seriously. If it is said that what we need is a higher rate of investment—and I think that we are all agreed on that—and that initial allowances will do something to stimulate that investment, the mere fact that there is to be a smaller surplus and that it does not look so well, even if there are to be no inflationary consequences, is an argument which cannot be taken seriously. It is merely giving way to irrational judgments which I do not think arise to any extent today and are of negligible importance compared with the real consequences of the higher investment which we seek.
It is, of course, true that more investment in itself involves, in a sense, additional inflationary pressure. That I have always conceded, but, after all, the whole basis of this Budget was the need for additional pressure of that kind. The only question is whether the pressure was to come at the consumer or at the investment end. I do not want to go over all that ground again, but I think that it is far more desirable that it should come at the investment end. If the Financial Secretary and the Chancellor really feel that a rise in investment is too dangerous in present circumstances, that the physical resources are all fully occupied, and that we cannot afford to allow any increase of orders falling upon the engineering and other similar industries, that is, of course, a new situation, but I would say to him that, if that is so, the right course for the Government to pursue is not to


hold back investment but to reduce consumption in order to offset the increase in expenditure on equipment. Moreover, if that is their point of view, it is a complete indictment of their Budgetary policy.
I do not know what the Financial Secretary is going to say about it, but I hope he will deal with that point and give us at least a more satisfactory and convincing answer than he did during the Committee stage. That is the reason why we have raised this matter again, and we attach very great importance to it. Obviously, higher investment, as we all know, is of major importance in determining the increase in productivity which we all desire, and everything should be done to encourage it. Here is something which can be done, we think, without danger, and we believe that it is the most effective way of producing that additional investment. Therefore, we ask the Government to reconsider this matter and accept this very simple Amendment, which would do nothing but good for British industry.

Mr. Crosland: As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has pointed out, this is the second time in the course of the debate on the Finance Bill that this particular issue has been raised. We have raised it again not only, as he said, because we think that its intrinsic importance is great, but because we think that the case for what we suggest is very much stronger now than even it was a few weeks ago.
The reason why I suggest that it is very much stronger lies in the figures of the movement of labour published by the Ministry of Labour yesterday. These figures, which hon. Members will have seen in today's newspapers, give an extremely disturbing picture of what is happening in the country today. They show that professional, financial and miscellaneous services, during May, gained 16,000 workers, the distributive trades 7,000, the transport industries 3,000, food, drink and tobacco 11,000; and against these gains the losses were in precisely those industries which ought not to be losing but gaining, namely, the engineering industry which lost 6,000 workers and the metal manufacturing industries which lost 4,000 workers.
In view of what we all say about encouraging investment and the engineering sector and the like, it is a terrible state of affairs that during May the engineering and metal industries, between them, lost 10,000 workers, while these other industries gained a considerable number more than they had. In our view, therefore, the case for initial allowances for investment in capital goods generally is even stronger now than when we first put it forward three or four weeks ago.
The whole purpose of this Amendment is to reverse the tendency which I have described. The reason why, in our view, it is right that we should do so by doubling the suggested rate of initial allowances on plant and machinery and not by one of the other methods suggested by the other side, by reducing taxation on profits and the like, is the essential one that a concession granted to industry in the form of an initial allowance is tied to the capital expenditure which we want to encourage, whereas any concession granted to industry in the form of a general reduction in profits taxation is not tied to actual capital expenditure, and some part of it or, indeed, the whole part of it in unusual cases, may be distributed in higher dividends and not by increasing capital expenditure, which we wish to encourage.
It is because initial allowances are tied to investment, whereas other forms of removing the burden on taxation of profits are not, that we on this side of the House so much prefer them. That is presumably why hon. Members opposite like them a great deal less. It is, I think, an important point and links up with the point which my right hon. Friend stressed, which is that according to the method chosen of relieving industry of its alleged financial burden there will follow certain effects on distribution of income and distribution of wealth.
One obvious difference between granting the concession in the form of initial allowances and in the form of reduced profits tax is the difference in terms of their effect on share values. Any general reduction in profits taxation will lead to a general increase in share values, as we have seen on more than one occasion over the last few years, and the response of the Stock Exchange is the perfectly reasonable one that if industry's


financial resources are increased, everyone hopes—and it is a perfectly natural thing to hope—that this will be accompanied, sooner or later, by higher dividends.
A concession to industry granted in the form of higher initial allowances will not have this effect, at any rate in the short run, because in the short run this concession can only be used for purposes of capital expenditure and cannot possibly be used in order to raise dividends. So we say that one concession will increase share values and the other will not. That is why we prefer the initial allowance method and hon. Members opposite prefer a general remission on Profits Tax.
From this side we suggest that a larger rate of initial allowance must be regarded as an alternative to a reduction in the taxation of profits. This notion that the two were to be regarded as alternative was rather pooh-poohed by hon. Gentlemen opposite during the Committee stage. They got up one after the other, adopting the rather patronising attitude which some hon. Members opposite who are businessmen adopt if anyone who is not in the business world ventures to speak on such subjects.
They said that it was nothing but an interest-free loan and, therefore, naturally falls to be repaid, so that over the period of the loan as a whole the company is no better off. It gains during the early years but loses to the same extent during the later years so, taking a long period of years, they argued that the company getting it was no better off. I suggested, and I still think, that to use the analogy of the interest-free loan gives a false impression of what initial allowances are like.
If one is thinking in terms of one machine which attracts the initial allowance, it must be true that the 20 per cent. initial allowance in the first year comes to be repaid in later years. But capital expenditure does not normally consist in buying one machine only, and a second machine to replace it once the effective life of the first has expired. For any firm of any size capital expenditure is a more or less continuous process, going on year after year.
Provided that that is so, there are always machines attracting the initial

allowance, so that at any given moment in the life of a company, provided initial allowances are not withdrawn or reduced, there is some of this loan outstanding. In other words, the company is drawing more in initial allowances than it is repaying towards the end of the life of the older machines. So long as there is some of this loan outstanding, where capital expenditure is more or less a continuous process, the effect is that the firm is paying less in profits taxation than it would otherwise be paying.
The proof of this, as the Chancellor was kind enough to give these figures in response to a request from me on the Committee stage, is that however long a period is taken, initial allowances represent a net cost to the Exchequer, and the obverse of the net cost to the Exchequer is naturally the fact that industry as a whole is paying less in taxation than it would be otherwise. So we see from this that initial allowances are not to be dismissed as an interest-free loan which is invariably repaid; they are to be considered as a serious alternative to what we always hear demanded from the other side of the House, namely, a flat reduction in the taxation of profits.
I conclude by reiterating that they are an alternative which we on this side of the House much prefer, because they cannot be frittered away or dissipated merely in the form of higher dividend payments. The concession to industry is only attracted by the firm to the exact extent that it spends money on plant and machinery, and it is, therefore, an admirable way of encouraging investment in this country, whereas most of the other ways have defects. In view of the serious position shown by the movement of labour out of the capital goods sector of industry into the consumer goods sector of industry, we suggest that there is a strong case for the Government accepting our Amendment.

8.15 p.m.

Mr. Boyd-Carpenter: As the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) has said, this is one of the major parts of the proposals of my right hon. Friend, and it is also one which was discussed at considerable length in several aspects during our debates in Committee. Therefore, like the right hon. Gentleman, I shall not seek


to weary the House by going over all that ground again.
It is certainly not necessary for the right hon. Gentleman to persuade us that the restoration of initial allowances is a desirable thing. After all, we are doing that. Indeed, here is one of those rather entertaining paradoxes which arise in public life, that the recommendation that we should pay even greater attention to initial allowances comes from the right hon. Gentleman, to whom it fell to withdraw them in 1951, and it is urged upon a Government which is taking the step of restoring them. The only point between us is the extent of that restoration. The Amendment would double from 20 per cent. to 40 per cent. the rate applicable to plant and machinery. Therefore, I say at once that what we are concerned with here is not a great clash of principle but some real difference of emphasis.
As he has said more than once, the right hon. Gentleman would attach greater relative reliance to the initial allowance, to the detriment of, and instead of, other methods. We regard it as one of the instruments in the economic armoury of my right hon. Friend, but we do not give to it quite so much importance or allot to its use quite so much money as the right hon. Gentleman. The fact that we are restoring the allowances, however, shows much more clearly than anything I could say that we appreciate the important part which we expect they will play in the stimulation of investment.
So far as the cost is concerned, I shall address myself to one or two of the observations made by the right hon. Gentleman. Leaving aside for the moment his important point, to which I shall come back, that from a budgetary point of view we could ignore the apparent loss of revenue, or all but ignore it, it might be helpful to have the figures in mind. The cost of the initial allowance at 20 per cent. on plant and machinery, as it stands in the Clause at the moment, will be £76 million in a full year and £50 million in 1954–55. The effect, in substance, of the proposal to double it would be almost mathematically exactly to double that cost.
That is why I ventured to say in Committee that the question of the cost and

of our preference for using other instruments also to stimulate economic recovery were interlocked, because it is a matter of simple calculation that if my right hon. Friend had not decided to make money available, both for the reduction of the standard rate of Income Tax and for the abolition of the Excess Profits Levy, clearly he would have had more funds available which he could have used, had he desired to do so, for the purpose of restoring the initial allowance at a higher rate.
That is a good illustration of what I was saying a moment ago, that the difference between us is one of emphasis. The right hon. Gentleman and his hon. Friend the Member for Gloucestershire, South (Mr. Crosland) would like to concentrate their effort very largely upon the direct stimulation of investment by a higher rate of initial allowance on plant and machinery.
We, on the other hand, while using that instrument, and by reducing the burden of direct taxation upon companies—the Excess Profits Levy, of course, is entirely on companies, and a substantial element in the Income Tax relief is also going to companies—from the point of view that we do not believe that investment can be stimulated simply in vacuo, believe that it is necessary to create conditions in which reasonable expectations of being able to earn and retain a reasonable profit have also to be created.
That is to say, we do not accept the view, which is implicit in a great deal of what is said by hon. and right hon. Members opposite, that it is both possible and right to make concessions to industry provided only that in no circumstances do we make concessions to the owners of industry. We do not believe that we can so isolate the company from the owner of the company and that unless some relief is also given in the burden of taxation upon profits, we shall not see that restoration of industrial and economic activity which it is our desire to see. That is where, to a considerable extent, we on this side differ from the right hon. Gentleman.
I come, then, to the right hon. Gentleman's extremely interesting and impressive argument, whose effect was largely that from the budgetary point of view we could disregard the loss of revenue involved in the initial allowances. It is,


of course, clear—I am not concerned to argue the contrary—that the transfer of savings which these allowances effect is a matter which clearly would have to be taken into account by any Chancellor of the Exchequer in the framing of his Budget.
I go this far with the right hon. Gentleman: that the knowledge that investment was being encouraged in this way and savings increased in industry would undoubtedly make a Chancellor of the Exchequer inclined to feel that from a strictly budgetary point of view he need go for a smaller surplus. I am not concerned to argue that. I would, however, suggest to the right hon. Gentleman that he carried his argument a little too far when he suggested that one could completely disregard this loss of revenue and could accept, not only a smaller surplus, but a surplus smaller by the exact amount of additional allowance conceded.

Mr. Gaitskell: The Financial Secretary has stated my argument correctly, subject to one qualification. That is, that the granting of the additional initial allowances leads to no increase in dividends. If it does lead to any increase in dividends, there is an exactly offsetting increase in corporate saving to the loss in public saving—it is, in fact, the same figure. Therefore, from the point of view of the economic effects of the Budget, there is no ill consequence whatever. I am not denying that the influence of the additional investment—the actual expenditure on plant and machinery—has economic consequences. Perhaps the hon. Gentleman can come to that argument, which I dealt with at the end of my speech.

Mr. Boyd-Carpenter: The right hon. Gentleman will, I think, concede that although it may be a desirable thing, it has an inflationary effect. Therefore, a Chancellor of the Exchequer, framing his Budget proposals in these circumstances, would also have to take that into account in deciding on the size of the surplus which he would wish to see. That it might be to some extent a countervailing factor—

Mr. Gaitskell: Is the Financial Secretary suggesting, then, that the reason the Government will not accept our proposal

is that they do not want to have any more investment?

Mr. Boyd-Carpenter: No. The right hon. Gentleman has no right to jump to that conclusion from what I have said. We were discussing the matter on a slightly academic plane. The very fact that my right hon. Friend is restoring these allowances is a perfectly clear indication of what he and the Government wish to do in this direction. The right hon. Gentleman knows that perfectly well.
The right hon. Gentleman, however, was carrying his argument a little too far. First, as I understand it, he is assuming that there will be in such circumstances a Budget surplus. I do not think he would carry his argument to the point of saying that we could disregard these allowances to the point of running into a Budget deficit. That is a qualification which one has to bear in mind in the forgoing of the very substantial sums of revenue over a good many years—I shall give the figures presently—which are implicit in this proposal.
Nor is the right hon. Gentleman giving full weight from the budgetary, and, therefore, to some extent from the economic, point of view to the consideration that the revenue forgone would involve additional Government borrowing and, of course, the payment of the interest on that Government borrowing, which is a subject on which the right hon. Member for Battersea, North (Mr. Jay) is particularly sensitive. Therefore, I am inclined to think that there is no direct conflict of principle between the right hon. Gentleman and ourselves, but that, here again, there is a difference of emphasis.
We would not go as far as the right hon. Gentleman in saying that one could from a budgetary point of view wholly disregard this loss of revenue, although I am equally ready to concede that one need not, perhaps, treat it as a complete diminution of the surplus which otherwise would be necessary. There is also the psychological question, to which my right hon. Friend the Chancellor of the Exchequer referred in the previous debate and to which the right hon. Gentleman referred this afternoon. That argument is a factor that has to be considered.
I have given the short-term figures and I promised to give the longer-term cost figures. Any figure for the future must


depend on a number of assumption, and these figures depend upon three assumptions: that the annual expenditure qualifying for the allowance remains constant, that its pattern as between different items remains constant, and that the rates of tax are unchanged. On that assumption, the cumulative cost rises after 10 years to £435 million and then continues to rise to a figure of about £675 million, at which it begins to become steady.
That is the position on the present rates. The proposal involved in the Amendment would go a great deal further. It would not precisely double the cost, but the figure would be very nearly doubled, both at the 10-year stage and at the final point. Therefore, we are concerned with very large figures, not, of course, in this year's financial proposals which are not affected at all, but over the long term. That is why I suggest that my right hon. Friend is right to bear definitely in mind the substantial effect upon revenues over some years, notwithstanding the qualifications which we have been discussing which are involved in the proposals that the right hon. Gentleman has put forward.
We feel, therefore, that although there is much in what the right hon. Gentleman says as to the value of these allowances—that we accept, and we are restoring them—it is wise not to involve ourselves

at this stage in the additional commitments which restoring the plant and machinery rate to 40 per cent. would involve. We have to bear in mind the other changes which we have made, which will result in reduced revenue, and which, although the right hon. Gentleman may not approve of them, have, during our prolonged debates, been approved both by the House and in Committee, and which are now in the Bill.

While I should be the last to suggest that there is not a good deal of force in the right hon. Gentleman's argument, and while I certainly do not accept the suggestion that these allowances are either valuless to industry or without cost to the Exchequer, I think that the moderate and central line between the two extremes which my right hon. Friend has adopted—the line of restoring the allowances and at the same time giving direct relief through the Income Tax concession and through the E.P.L.—is the right way to secure the objective which we all desire: a steady flow of investment into British industry and a prosperous and healthy condition of that industry.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 228; Noes, 204.

Division No. 219.]
AYES
[8.30 p.m.


Aitken, W. T.
Butler, Rt. Hon. R. A. (Saffron Walden)
Galbraith, T. G. D. (Hillhead)


Allan, R. A. (Paddington, S.)
Campbell, Sir David
George, Rt. Hon. Maj. G. Lloyd


Alport, C. J. M.
Carr, Robert
Godber, J. B.


Amory, Julian (Preston, N.)
Cary, Sir Robert
Gomme-Duncan, Col. A


Amory, Heathcoat (Tiverton)
Clarke, Col. Ralph (East Grinstead)
Gough, C. F. H.


Anstruther-Gray, Major W. J.
Clarke, Brig. Terence (Portsmouth, W.)
Graham, Sir Fergus


Ashton, H. (Chelmsford)
Clyde, Rt. Hon. J. L.
Gridley, Sir Arnold


Assheton, Rt. Hon. R. (Blackburn, W.)
Colegate, W. A.
Grimston, Hon. John (St. Albans)


Astor, Hon. J. J.
Conant, Maj. R. J. E.
Grimston, Sir Robert (Westbury)


Baldock, Lt.-Cmdr. J. M.
Cooper, Sqn. Ldr. Albert
Hall, John (Wycombe)


Baldwin, A. E.
Cooper-Key, E. M.
Hare, Hon. J. H.


Banks, Col. C.
Craddock, Beresford (Spelthorne)
Harris, Frederic (Croydon, N.)


Barber, Anthony
Crosthwaite-Eyre, Col. O. E.
Harrison, Col. J. H. (Eye)


Baxter, A. B.
Crouch, R. F.
Harvey, Air Cdre. A. V. (Macclesfield)


Bell, Ronald (Bucks, S.)
Crowder, Sir John (Finchley)
Harvey, Ian (Harrow, E.)


Bennett, F. M. (Reading, N.)
Darling, Sir William (Edinburgh, S.)
Harvie-Watt, Sir George


Bennett, William (Woodside)
Deedes, W. F.
Heath, Edward


Bevins, J. R. (Toxteth)
Digby, S. Wingfield
Henderson, John (Cathcart)


Birch, Nigel
Dodds-Parker, A. D.
Higgs, J. M. C.


Bishop, F. P.
Donaldson, Cmdr. C. E. McA.
Hill, Dr. Charles (Luton)


Boothby, Sir R. J. G.
Doughty, C. J. A.
Hill, Mrs. E. (Wythenshawe)


Bowen, E. R.
Douglas-Hamilton, Lord Malcolm
Hinchingbrooke, Viscount


Boyd-Carpenter, J. A.
Drayson, G. B.
Hirst, Geoffrey


Boyle, Sir Edward
Drewe, Sir C.
Holland-Martin, C. J.


Braine, B. R.
Duncan, Capt. J. A. L.
Holmes, Sir Stanley (Harwich)


Braithwaite, Sir Albert (Harrow, W.)
Elliot, Rt. Hon. W. E.
Hope, Lord John


Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Fell, A.
Hornsby-Smith, Miss M. P.


Bromley-Davenport, Lt.-Col. W. H.
Finlay, Graeme
Howard, Hon. Greville (St. Ives)


Brooke, Henry (Hampstead)
Fisher, Nigel
Hudson, W. R. A. (Hull, N.)


Browne, Jack (Govan)
Fleetwood-Hesketh, R. F.
Hulbert, Wing Cdr. N. J.


Buchan-Hepburn, Rt. Hon. P. G. T
Fletcher-Cooke, C.
Hutchinson, Sir Geoffrey (Ilford, N.)


Bullard, D. G.
Ford, Mrs. Patricia
Hutchison, Lt.-Com. Clark (E'b'rgh, W.)


Bullus, Wing Commander E. E.
Fraser, Sir Ian (Morecambe & Lonsdale)
Hylton-Foster, H B. H


Butcher, Sir Herbert
Galbraith, Rt. Hon. T. D. (Pollok)
Jenkins, Robert (Dulwich)




Johnson, Eric (Blackley)
Nabarro, G. D. N.
Speir, R. M.


Johnson, Howard (Kemptown)
Neave, A. M. S.
Spens, Sir Patrick (Kensington, S.)


Jones, A. (Hall Green)
Nicholls, Harmar
Stanley, Capt. Hon. Richard


Joynson-Hicks, Hon. L. W.
Nicholson, Godfrey (Farnham)
Steward, W. A. (Woolwich, W.)


Kerr, H. W.
Nicolson, Nigel (Bournemouth, E.)
Stewart, Henderson (Fife, E.)


Lambton, Viscount
Nield, Basil (Chester)
Strauss, Henry (Norwich, S.)


Lancaster, Col. C. G
Noble, Cmdr. A. H. P.
Summers, G. S.


Langford-Holt, J. A.
Nugent, G. R. H.
Sutcliffe, Sir Harold


Law, Rt. Hon. R. K.
Oakshott, H. D.
Taylor, Charles (Eastbourne)


Leather, E. H C.
O'Neill, Phelim (Co. Antrim, N.)
Taylor, William (Bradford, N.)


Legge-Bourke, Maj. E. A. H
Orr-Ewing, Charles Ian (Hendon, N.)
Teeling, W.


Legh, Hon. Peter (Petersfield)
Osborne, C.
Thomas, Rt. Hon. J. P. L. (Hereford)


Lennox-Boyd, Rt. Hon. A. T.
Partridge, E.
Thomas, Leslie (Canterbury)


Lindsay, Martin
Peto, Brig. C. H. M.
Thomas, P. J. M. (Conway)


Linstead, Sir H. N.
Pilkington, Capt. R. A.
Thompson, Kenneth (Walton)


Lloyd, Maj. Sir Guy (Renfrew, E.)
Pitman, I. J.
Thompson, Lt.-Cdr. R. (Croydon, W.)


Lloyd, Rt. Hon. Selwyn (Wirral)
Pitt, Miss E. M.
Thorneycroft, Rt. Hn. Peter (Monmouth)


Lockwood, Lt.-Col. J. C.
Powell, J. Enoch
Thornton-Kemsley, Col. C. N.


Low, A. R W.
Price, Henry (Lewisham, W.)
Tilney, John


Lucas, Sir Jocelyn (Portsmouth, S.)
Prior-Palmer, Brig. O. L
Touche, Sir Gordon


Lucas, P. S. (Brentford)
Profumo, J. D.
Turner, H. F. L.


Lucas-Tooth, Sir Hugh
Raikes, Sir Victor
Turton, R. H.


McAdden, S. J.
Rayner, Brig. R.
Vane, W. M. F.


McCallum, Major D.
Redmayne, M.
Vaughan-Morgan, J. K.


McCorquodale, Rt. Hon. M. S.
Rees-Davies, W. R.
Vosper, D. F.


Mackeson, Brig. H. R.
Remnant, Hon. P.
Wade, D. W.


McKibbin, A. J.
Renton, D. L. M.
Wakefield, Edward (Derbyshire, W.)


Mackie, J. H. (Galloway)
Roberts, Peter (Heeley)
Wakefield, Sir Wavell (St. Marylebone)


Maclay, Rt. Hon. John
Robinson, Roland (Blackpool, S.)
Walker-Smith, D. C.


MacLeod, John (Ross and Cromarty)
Rodgers, John (Sevenoaks)
Ward, Hon. George (Worcester)


Macpherson, Niall (Dumfries)
Ropner, Col. Sir Leonard
Ward, Miss I. (Tynemouth)


Maitland, Patrick (Lanark)
Russell, R. S.
Waterhouse, Capt. Rt. Hon. C.


Manningham-Buller, Sir R. E.
Ryder, Capt. R. E. D.
Webbe, Sir H. (London & Westminster)


Markham, Major Sir Frank
Salter, Rt. Hon. Sir Arthur
Wellwood, W.


Marlowe, A. A. H.
Scott, R. Donald
Williams, Gerald (Tonbridge)


Marshall, Sir Sidney (Sutton)
Scott-Miller, Cmdr. R
Williams, Sir Herbert (Croydon, E.)


Maude, Angus
Shepherd, William
Williams, Paul (Sunderland, S.)


Maudling, R.
Simon, J. E. S. (Middlesbrough, W.)
Williams, R. Dudley (Exeter)


Maydon, Lt.-Comdr. S. L. C.
Smithers, Peter (Winchester)
Wilson, Geoffrey (Truro)


Medlicott, Brig. F.
Smithers, Sir Waldron (Orpington)
Wood, Hon. R.


Mellor, Sir John
Smyth, Brig. J. G. (Norwood)



Monckton, Rt. Hon. Sir Walter
Snadden, W. McN.
TELLERS FOR THE AYES:


Morrison, John (Salisbury)
Spearman, A. C. M.
Mr. Studholme and Mr. Wills.




NOES


Albu, A. H.
Cove, W. G.
Harrison, J. (Nottingham, E.)


Allen, Arthur (Bosworth)
Craddock, George (Bradford, S.)
Hastings, S.


Allen, Scholefield (Crewe)
Crosland, C. A. R.
Hayman, F. H.


Anderson, Alexander (Motherwell)
Crossman, R. H. S.
Healey, Denis (Leeds, S E.)


Anderson, Frank (Whitehaven)
Cullen, Mrs. A.
Henderson, Rt. Hon. A. (Rowley Regis)


Attlee, Rt. Hon. C. R.
Daines, P.
Herbison, Miss M.


Awbery, S. S.
Dalton, Rt. Hon. H.
Hewitson, Capt. M.


Bacon, Miss Alice
Darling, George (Hillsborough)
Hobson, C. R.


Baird, J.
Davies, Ernest (Enfield, E.)
Holman, P.


Balfour, A.
Davies, Harold (Leek)
Houghton, Douglas


Barnes, Rt. Hon. A. J.
Davies, Stephen (Merthyr)
Hoy, J. H.


Bartley, P.
de Freitas, Geoffrey
Hubbard, T. F.


Bellenger, Rt. Hon. F. J.
Deer, G.
Hudson, James (Ealing, N.)


Bence, C. R.
Delargy, H. J.
Hughes, Emrys (S. Ayrshire)


Benn, Hon. Wedgwood
Dodds, N. N.
Hughes, Hector (Aberdeen, N.)


Benson, G.
Dugdale, Rt. Hon. John (W. Bromwich)
Irvine, A. J. (Edge Hill)


Beswick, F.
Ede, Rt. Hon. J. C.
Irving, W. J. (Wood Green)


Bing, G. H. C.
Edelman, M.
Janner, B.


Blackburn, F.
Edwards, Rt. Hon. John (Brighouse)
Jay, Rt. Hon. D. P. T.


Blyton, W. R.
Edwards, W. J. (Stepney)
Jeger, George (Goole)


Boardman, H.
Evans, Albert (Islington, S. W.)
Jeger, Dr. Santo (St. Pancras, S.)


Bottomley, Rt. Hon. A. G.
Evans, Edward (Lowestoft)
Johnson, James (Rugby)


Bowden, H. W.
Evans, Stanley (Wednesbury)
Jones, David (Hartlepool)


Bowles, F. G.
Fernyhough, E.
Jones, Frederick Elwyn (West Ham, S.)


Braddock, Mrs. Elizabeth
Fletcher, Eric (Islington, E.)
Jones, Jack (Rotherham)


Brockway, A. F.
Follick, M.
Keenan, W.


Brook, Dryden (Halifax)
Foot, M. M.
Key, Rt. Hon. C. W.


Broughton, Dr. A. D. D.
Forman, J. C.
King, Dr. H. M.


Brown, Rt. Hon. George (Belper)
Gaitskell, Rt. Hon. H. T. N.
Kinley, J.


Brown, Thomas (Ince)
Gibson, C. W.
Lee, Miss Jennie (Cannock)


Burke, W. A.
Glanville, James
Lever, Leslie (Ardwick)


Burton, Miss F. E.
Gordon-Walker, Rt. Hon. P. C.
Lewis, Arthur


Butler, Herbert (Hackney, S.)
Grey, C. F.
Lindgren, G. S


Carmichael, J.
Griffiths, Rt. Hon. James (Llanelly)
Lipton, Lt.-Col. M


Castle, Mrs. B. A.
Griffiths, William (Exchange)
Logan, D. G


Clunie, J.
Hall, John T. (Gateshead, W.)
MacColl. J. E.


Coldrick, W.
Hamilton, W. W.
McGovern, J.


Collick, P. H.
Hannan, W.
McInnes, J.


Corbet, Mrs. Freda
Hargreaves, A.
McKay, John (Wallsend)







McLeavy, F.
Proctor, W. T.
Taylor, Rt. Hon. Robert (Morpeth)


MacPherson, Malcolm (Stirling)
Pryde, D. J.
Thomas, Ivor Owen (Wrekin)


Mann, Mrs. Jean
Pursey, Cmdr. H.
Thomson, George (Dundee, E.)


Manuel, A C.
Rankin, John
Thornton, E.


Marquand, Rt. Hon. H. A
Reeves, J.
Timmons, J.


Mason, Roy
Reid, Thomas (Swindon)
Tomney, F.


Mayhew, C. P.
Reid, William (Camlachie)
Turner-Samuels, M.


Messer, Sir F.
Rhodes, H.
Ungoed-Thomas, Sir Lynn


Mikardo, Ian
Richards, R.
Viant, S. P.


Mitchison, G. R.
Robens, Rt. Hon. A.
Wallace, H. W.


Moody, A. S.
Robinson, Kenneth (St. Pancras, N.)
Wells, Percy (Faversham)


Morgan, Dr. H. B. W.
Ross, William
Wells, William (Walsall)


Morley, R.
Royle, C.
Wheatley, Rt. Hon. John


Morrison, Rt. Hon. H. (Lewisham, S.)
Shackleton, E. A. A.
Wheeldon, W. E.


Moyle, A.
Short. E. W.
White, Henry (Derbyshire, N. E.)


Mulley, F. W.
Simmons, C. J. (Brierley Hill)
Whiteley, Rt. Hon. W.


Nally, W.
Skeffington, A. M.
Wigg, George


Neal, Harold (Bolsover)
Slater, Mrs. H. (Stoke-on-Trent)
Wilcock, Group Capt. C. A. B.


Noel-Baker, Rt. Hon. P. J.
Slater, J. (Durham, Sedgefield)
Wilkins, W. A.


Oliver, G. H.
Smith, Ellis (Stoke, S.)
Willey, F. T.


Orbach, M.
Snow, J. W.
Williams, Rt. Hon. Thomas (Don V'll'y)


Oswald, T.
Sorensen, R. W.
Williams, W. R. (Droylsden)


Padley, W. E.
Soskice, Rt. Hon. Sir Frank
Williams, W. T. (Hammersmith, S.)


Paget, R. T.
Sparks, J. A.
Winterbottom, Ian (Nottingham, C.)


Palmer, A. M. F.
Steele, T.
Woodburn, Rt. Hon. A.


Pannell, Charles
Stewart, Michael (Fulham, E.)
Wyatt, W. L.


Parker, J.
Stross, Dr. Barnett
Yates, V. F.


Peart, T. F.
Summerskill, Rt. Hon. E.



Popplewell, E.
Sylvester, G. O.
TELLERS FOR THE NOES:


Price, Joseph T. (Westhoughton)
Taylor, Bernard (Mansfield)
Mr. Holmes and Mr. John Taylor.


Question put, and agreed to.

Clause 17.—(CHANGES IN OWNERSHIP OF TRADE, ETC., OR TERMS OF PARTNERSHIP.)

Mr. Maudling: I beg to move, in page 14, line 15, to leave out from "election," to "his," in line 17, and to insert:
may be made by any person, it may in the case of his death be made by.
This is a drafting Amendment consequential upon the acceptance in Committee of an Amendment by the hon. Member for Islington, East (Mr. E. Fletcher) to amend subsection (2) of the Clause. That subsection made certain provisions about notice being given and reference to that notice is made in line 15. This Amendment merely deletes the reference to subsection (2).

Amendment agreed to.

Clause 26.—(IRON AND STEEL COMPANIES (PROFITS TAX AND EXCESS PROFITS LEVY).)

Mr. Deputy-Speaker (Mr. Hopkin Morris): The next Amendment is that in page 27, line 2, in the name of the hon. and learned Member for Kettering (Mr. Mitchison).

Mr. Jay: On a point of order. Do I understand, Mr. Deputy-Speaker, that you are not calling the Amendment to Clause 14, in page 10, line 39, to insert a new subsection (6)? We had reason to believe that that was to be called.

Mr. Deputy-Speaker: No, that Amendment is not selected.

Mr. Gaitskell: Further to that point of order. I understand that both the Government and ourselves expected and were informed that the Amendment standing in my name, in page 10, line 39, was to be called.

Mr. Deputy-Speaker: No, we have passed it. It is marked "Not selected" in my paper.

Sir F. Soskice: I beg to move, in page 27, line 2, after "Agency," to insert:
being a distribution within the meaning of section thirty-six of the Finance Act, 1947, by way of dividend or cash bonus or of assets in kind.
The reason we put down this Amendment was that we were very puzzled as to the object of Clause 26. The Financial Secretary, with the assistance of the Solicitor-General, gave us some examples of the purposes to which this Clause was to be put, but we could not square the examples with the wording of the Clause and the machinery for which the Clause seems to provide.
In effect, the Clause says that when the Treasury certifies that what would otherwise be a distribution for Profits Tax purposes within the meaning of Section 36 of the Finance Act, 1947, is made by a company owned by the Agency, and certifies that that distribution is for the purpose of the discharge by the Agency of its duties, it shall not attract Profits Tax. That, as a concept, seems relatively simple and easy to understand, but what we do not understand, and what we are


asking the Financial Secretary to explain to us, is what, in fact, are the types of distribution which he envisages.
If one asks what is a distribution within the meaning of Section 36 of the Finance Act, 1947—in other words, a distribution which produces the result that the distributed rate of Profits Tax is applicable—one finds that it is a distribution of dividends, whether made directly or indirectly, or of assets in kind. That is what a distribution is, and, therefore, when we look at Clause 26 (1), we ask ourselves in what circumstances is it likely that one of these companies owned by the Agency will pay dividends or distribute assets in kind in circumstances in which the Treasury will be prepared to certify that that distribution is for the Agency's purposes.
I have been reading the speech of the Financial Secretary in the Committee stage, and I find that he gave us no examples, but, with the assistance of the Solicitor-General, he suggested that an issue of bonus shares might constitute such an example. One can conceive that, for the purpose of reconstruction or reorganisation, such a company owned by the Agency might capitalise its assets by the issue of bonus shares. That we can well understand. But where that falls within the Clause, we do not understand. The Clause just does not seem to fit it.
8.45 p.m.
It is possible that when the Financial Secretary talked about the issue of bonus shares, he had in mind Clause 26 (2), but that subsection only relates to the case where there is an issue of redeemable preference shares for the purpose of capitalising the assets of one of these companies, and then that capitalisation is subsequently reduced by payment back of capital. It is only in those circumstances, under Section 31 of the Finance Act, 1951, that there can be a transaction which may give rise to a Profits Tax liability.
When the Financial Secretary tells us simply that an issue of bonus shares is the kind of distribution which is contemplated, it occurs to us that he might have been thinking of that subsection. But if he was thinking of that subsection, we then ask, when is that circumstance going to occur for the purpose of reorganising one of these companies? There is first

to be a capitalisation of assets, and then capital is to be returned and subsequently written down in such circumstances that the transaction falls within Section 31 of the Finance Act, 1951.
What troubles my hon. and right hon. Friends is that they cannot conceive in what sort of circumstances the kind of double transaction to which subsection (2) seems to relate is likely to take place, and not knowing in what circumstances it is likely to take place, they are hesitant as to the object for which such a double transaction might be embarked upon. Clearly, they cannot willingly give their sanction to a Clause of this sort without knowing for what purpose that kind of transaction is to take place. I hope that the Financial Secretary will give us examples of when it is likely that a transaction consisting of the writing up of capital followed by a writing down of capital, such as to give rise to a tax liability under the Finance Act, 1951, is likely to occur, and for what purpose. That is the first question.
As I indicated a moment ago, the Financial Secretary said that an issue of bonus shares might be a case of distribution. I wondered if he had in mind the wording of paragraph (a) of Section 36 (1) of the Finance Act, 1947, which defines such a distribution. But if he had, I cannot help thinking that he may have fallen into an error, because the expression there is not an issue of bonus shares which in terms of that definition constitutes a distribution. That paragraph relates to a cash bonus, which is quite a different thing. It is not an issue of bonus shares at all.
I repeat that within the meaning of the 1947 Act distribution is either an issue of dividend, a cash bonus or a return of assets in kind. What are to be the distributions which are to fall within the scope of subsection (1)? I have looked through the hon. Gentleman's speech, and I really do not think that he gave us any intelligible example of when it is to be done and what distributions are envisaged. The situation would be that one would be dealing with companies which are wholly owned by the Agency. Is it contemplated that these companies shall, in some way, distribute their assets in kind to the Agency? If so, for what purpose, and in the course of what kind of reorganisation for the purpose of the


disposition of the shares of these companies?
It seems to us that the matter has been left in a very enigmatic way, and the reason why we have put down this Amendment is because we feel that we must reopen the discussion in order to make certain that we are not giving approval to something which in principle is wholly undesirable. If the Financial Secretary, with the help of the Solicitor-General, could have interpreted the matter on the previous time, and could have told us what transactions were envisaged, we might have been able to say that we were agreeable to the Clause, but, as the matter stands, we are left in complete and almost abysmal ignorance as to what sort of thing is contemplated here.
I hope that the Financial Secretary has been able to look through his brief and underline the real examples that are contemplated, and that he can tell us what they are. We can then indicate whether the proposal in the Clause is reasonable or not. It does not satisfy us for the Financial Secretary simply to say "We think it unreasonable that distribution which is effected for the purpose of reorganisation by the Agency in discharge of its duty should attract tax." It depends entirely what the transaction is. That is exactly what we want to know. Will the Financial Secretary give us examples of transactions which fall within subsection (1) and transactions which fall within subsection (2) and describe them to us, and we shall then be able to make up our minds.

Mr. Boyd-Carpenter: Some of the questions of the right hon. and learned Gentleman go more to the root of the Clause than to this Amendment, which seeks to reduce the number of types of distribution which the Treasury can specify under the Clause. My right hon. Friend has considered whether, in the light of this Amendment, the Clause is not drafted too widely. It has been drafted so as to cover not only the transactions which we have in mind and of which I gave examples, but also the cases which it is not desired to cover.
The effect of the Amendment will be to reduce the categories concerned to those where there was a distribution within the meaning of Section 36 of the Finance Act, 1947, by way of dividend or cash bonus, or of assets in kind. Having considered

the position, my right hon. Friend has come to the conclusion that these words, though somewhat more cumbrous than those in the Clause as it stands, would cover all the transactions which it can be contemplated we should desire to cover, and my right hon. Friend therefore authorises me to say that he is ready to advise his hon. Friends to accept the Amendment.

Sir F. Soskice: Flattering as it is to me, and to those associated with me in putting down this Amendment, that it should have been so readily accepted, it is, nevertheless, clear that it has been made by the Financial Secretary a subterfuge into which he has dived in a very ignominious fashion in order to avoid having to answer the simple question that I put to him. Does he, or does he not, know what types of distribution it is intended to embark upon under the sanction of this Clause?
If he does not know, because his brief is incomplete or he cannot read it in time, perhaps he will be so good as to be honest and say so. If he does know can he, while accepting the Amendment, give us an intelligible reason why he will not tell us? Why is he keeping it a secret? The Chancellor of the Exchequer is sitting next to him. Cannot the right hon. Gentleman tell us? I am grateful to the Chancellor for being so frank as to shake his head. Does nobody in the House know?
Cannot the Minister get any information from the Officials' Box? Does nobody on the Front Bench know what this Clause is for? Is that really the case? If so, it is a most monstrous way of making proposals to the House to have no idea of what they are for. The Financial Secretary is the greatest adept in taking a brief which simply says, "Nothing doing. Usual answer," and giving a long and elaborate answer. He is like a housewife who has been given the sparsest ingredients and yet produces a beautiful meal, but the sort of meal that always leaves one hungry afterwards.
While thanking the hon. Gentleman very much indeed for at least limiting the scope of this extraordinary Clause, I do appeal to him to try to go one better than the Chancellor and not merely shake his head, though I admire the Chancellor's honesty and fairness. Cannot the Financial Secretary conjure up


from his fertile imagination a type of transaction that might be covered by this Clause? This is the most extraordinary exhibition I have ever seen from a Front Bench.

Mr. Boyd-Carpenter: I fully appreciate the right hon. and learned Gentleman's feeling that one end has let go of the rope, but he has amused himself and us with his observations. He recalls perfectly well that we had a long debate in Committee and that I gave during that debate a clear and definite indication of the use of these powers.

Sir F. Soskice: No.

Mr. Boyd-Carpenter: The right hon. and learned Gentleman will recall that, in particular, I indicated that during the course of reconstruction of the companies, which was to get them into a suitable shape for sale, it would be necessary to effect distributions and arrange for the purchase and issue of shares for redistribution. For example, there was the distribution to the Agency in money in one case. [Interruption.] I really do not intend to be cross-examined by a sedentary right hon. and learned Gentleman.

Sir F. Soskice: May I, as an upstanding right hon. and learned Gentleman then, ask why?

Mr. Boyd-Carpenter: Nor am I going to be tempted even by an upstanding right hon. and learned Gentleman to inflict upon the House the very long speech which I made in Committee and which the right hon. and learned Gentleman, when he has the time to read it, will no doubt find resolves his doubts.
It is, of course, obvious that we are reconstructing the companies to get them into an appropriate state for sale, and only while they are completely in the ownership of the Agency, for that is the limiting condition. There will be distribution in one form or another. It will take many forms which I will not enumerate now, for if I did I could not enumerate them all in the available time and the right hon. and learned Gentleman would make it a great matter of

complaint henceforward that I had failed to enumerate some on this occasion. If he really wants to know, he should read the speech which I made during the Committee stage.

Amendment agreed to.

Further Amendment made: In page 28, line 21, leave out paragraph (a).—[Sir F. Soskice.]

New Schedule.—(DUTIES ON EXPOSED CINEMATOGRAPH FILM.)

1. Where the rate of duty applicable to any class or description of exposed cinematograph film under the Third Schedule to the Finance Act, 1939, amounts in the case of any goods of that class or description to less than ten per cent. of the value of those goods, the general ad valorem duty shall be charged on those goods under Part I of the Import Duties Act, 1932, at such reduced rate as is equal to the rate of duty so applicable.
2. The rates of duty shown in the Second Schedule to the Import Duties (Consolidation) Order, 1949, in respect of exposed cinematograph film described in sub-paragraph (iii) of paragraph (20) of Group XVIII shall be shown in the second column instead of in the third column; and in relation to such film paragraph 1 of this schedule shall have effect in substitution for sub-paragraph (3) of Article 4 of that Order.
3. The provisions of subsection (2) of section (Import duties on certain sound-recorded material) of this Act may be revoked or varied as if they were contained in an order of the Treasury made under the Import Duties Act, 1932, and the foregoing provisions of this Schedule may be revoked or varied as if they were contained in an order of the Treasury made under section fourteen of the Finance Act, 1933, in pursuance of such an agreement as is mentioned in that section.—[Mr. Boyd-Carpenter.]

Brought up, and read the First time.

Mr. Boyd-Carpenter: I beg to move, "That the Schedule be read a Second time."
This new Schedule is consequential on the Government's new Clause with respect to duties on imported cinema films which the House accepted yesterday.

Schedule read a Second time, and added to the Bill.

Bill to be read the Third time Tomorrow, and to be printed. [Bill 103.]

Orders of the Day — MINISTRY OF CIVIL AVIATION (TRANSFER OF FUNCTIONS)

9.0 p.m.

The Minister of Transport and Civil Aviation (Mr. Alan Lennox-Boyd): I beg to move:
That an humble Address be presented to Her Majesty, praying that the Transfer of Functions (Ministry of Civil Aviation) Order, 1953, be made in the form of the Draft laid before this House on 23rd June.
This draft Order which we are now about to discuss is made under the authority of Section 1 of the Ministers of the Crown (Transfer of Functions) Act, 1946. As my right hon. Friend the Lord Privy Seal said a week ago, when another merger of Government Departments was being discussed, it is the Government's duty to look continually at the structure of Government and he added:
… what seems best in the public interest at one time may very well have to be modified at another."—[OFFICIAL REPORT, 30th June, 1953; Vol. 517, c. 267.]
The right hon. Member for Lewisham, South (Mr. H. Morrison) dealt with this very point when he introduced the Ministers of the Crown (Transfer of Functions) Bill in 1946. He said then:
The tasks of government are so complex and develop so rapidly that Ministers can fairly ask Parliament to grant some little latitude in adapting the executive machinery to administrative needs from time to time.
When commending the Bill he added that it
… should prove a useful Measure both to this and to succeeding Administrations."—[OFFICIAL REPORT, 25th January, 1946; Vol. 418, c. 454.]
Perhaps he did not then have in mind the succeeding Administration would be a Conservative Administration but none the less we are very glad to profit by the opportunities that the right hon. Gentleman provided.
The causes that dictated this merger are not similar to those which have led to the merger of the Ministry of Pensions and the Ministry of National Insurance. As my right hon. Friend the Minister of Pensions said last week, one of the reasons for that merger was the running down of the Ministry of Pensions. No suggestion can possibly be made that either of the

two Departments for which I am responsible, either the Ministry of Transport or the Ministry of Civil Aviation, are in any sense running down. We are doing our best to keep our staffs within modest limits, and any economy of staff in both Departments has been dictated not by any loss of work but by very careful husbandry.
I am glad to say that in the Ministry of Transport we have actually reduced our numbers from nearly 10,000 on 1st April, 1948, to 6,400 on 1st April last, though a major factor in this decline, of course, has been that we are no longer responsible for many wartime duties that the old Ministry had to perform. But none the less we are not all that far away from our pre-war figures, when, with fewer duties, we had at that time 5,900 in the Ministry of Transport and in the Marine Department of the Board of Trade that looked after the shipping interests.
In the field of civil aviation there has also been made an economy in staff which is, I think, quite remarkable considering the enormous increase in the duties of that Department since it was first formed—increases so significant that, for example, the number of passenger miles flown in 1946 has increased from 363 million miles to 1,229 million miles, involving, as that inevitably does, in increased work for those people responsible not only for helping the Corporations and private companies but also for the provision of many of the ground services without which none of these planes could fly at all.
I should like, in commending this Motion to the House, to kill, I hope for all time, any suggestion that in my Department of the Ministry of Civil Aviation the number still employed, about 7,000, are engaged on headquarters work. It was a very cruel mistake when it was suggested some time ago that there were a large number of people—"swollen bureaucrats," I think they were called—at headquarters engaged on these tasks. All but 1,385 of the people employed by the Ministry of Civil Aviation today are employed at the outstations, doing vital work—as, indeed, they are at headquarters—without which we should not be able to hold and increase the undoubted lead in the air which we now enjoy.
There is another difference between this proposed merger and the merger which took place last week, in that last week the Departments of two different Ministers were being merged, and tonight all I am asking the House is that two Departments, over which I have the single responsibility, should be merged. As the House well knows, a single Minister has been responsible for both transport and civil aviation since the last General Election, and the appointment of that single Minister clearly foreshadowed the merger that I am now proposing.
This is a merger in the true sense of the term, in which both Departments being merged are bringing great contributions to the aid of each other. The Ministry of Transport has gone through many changes since it was first formed in 1919 for the purpose, as the statute reads:
… of improving the means of, and the facilities for, locomotion and transport …
As the hon. Member for Wellingborough (Mr. Lindgren) knows, it had no responsibility for shipping.
In 1939, the Mercantile Marine Department of the Board of Trade was made into the Ministry of Shipping. Two years later, all the functions of the Ministry of Transport—as it had been—and the Ministry of Shipping were transferred to the Ministry of War Transport. At the end of the war the Minister of War Transport, with all his previous functions, became Minister of Transport. So there have been many changes even in the 30 years' life of the Ministry of Transport, and this is another chapter in what I think we should all agree is an honourable story.
If hon. Members will turn to the draft Statutory Instrument they will see, in Article 2 (1), the use of the words:
The Ministry of Civil Aviation is hereby dissolved …
The purpose of those words which, unless explained, might appear to be a little wounding and unfortunate, is that in order to effect a merger under the provisions of the 1946 Act—which Act was quite rightly introduced by hon. Members opposite—it is necessary to dissolve one Department and transfer the functions of the Minister concerned to another Ministry.
I am deeply concerned about the future of civil aviation, and most anxious that nothing should happen either to thwart our legitimate hopes or give rise to any doubts in the minds of those engaged in this common forward drive. We considered seriously whether it would not be better to dissolve the Ministry of Transport and transfer its activities to the Ministry of Civil Aviation. It would have amounted to the same thing in the end, but it would have made absolutely plain the great importance which we attach to civil aviation.
On reflection, however, this appeared to be much too complicated a task. The Acts governing the Ministry of Transport go back a good many years—in one way or another as much as 100 years. All the activities of the Ministry of Civil Aviation are dealt with by post-war legislation, so it is possible, comparatively simply, to carry out this merger by abolishing the younger Department and merging it with the old one.
I have said a few words about the story of the Ministry of Transport over the last few years. I see at least three hon. Members opposite with a close personal knowledge of the industry, and two with a close knowledge of the Department, and they will remember how the Ministry of Civil Aviation came to be created. It is told in Parliamentary records and debates, but it is also told very vividly in Lord Swinton's book, "I Remember." He described how, when he was in West Africa in the summer of 1944, the present Prime Minister, who was then Leader of the Coalition Government, telegraphed to him the news that civil aviation had become a pressing problem. President Roosevelt, the Prime Minister said, had convened a world conference to meet that November in Chicago, and the Government felt it was important to create a Ministry of Civil Aviation.
Lord Swinton added in his book what has now become generally understood—that one of the great disadvantages under which we suffered then was one of the compelling reasons for the creation of a separate civil aviation Department. All the affairs of civil aviation had hitherto been vested, despite Departmental divisions, in the Air Ministry. At an early stage, Lord Swinton said, in our pooling


of resources with the United States, it was agreed that we should concentrate on bombers and fighters and that they should take charge of civil and transport aircraft. But after the tide of war turned and allied victory was assured, this concentration on war aircraft gave rise to a growing anxiety as to our prospects in civil aviation, so a separate Department was created—the Ministry of Civil Aviation.
Under its guidance began a great many fruitful activities which have now given their benefit to the nation and the world, and all of which will be continued under our proposals. In particular, on this point, I want to mention that among the first of the activities—to which we intend to devote considerable interest and importance—was the creation of the Commonwealth Air Transport Council and the International Civil Air Organisation. I lately had the privilege, as Minister of Civil Aviation, of opening meetings of both those organisations, and I was interested to talk to delegates from foreign countries and from the British Commonwealth and to ask how they met this need both to economise in Government resources and to see that proper attention was given to the needs of civil aviation.
I found, for example, that in the United States of America civil aviation affairs are in the hands of the Secretary of Commerce. As I think many hon. Members know, there is also in America the Civil Aeronautics Administration and the Civil Aeronautics Board. In the Netherlands, the Minister of Transport and Waterways looks after civil aviation In Italy it is the Minister of Defence. In France, it is the Minister of Public Works, Transport and Tourism. In Belgium, it is the Minister of Communications. Even in our own Commonwealth there are widespread differences. In Australia, the Postmaster-General is also Minister of Civil Aviation. In Canada, as we propose here, it is the Minister of Transport who is responsible for civil aviation, and the same is true of Ceylon. In India it is the Minister of Communications and in New Zealand it is the Minister of Defence, as is the case in Pakistan. In Rhodesia it is the Minister of Mines, Transport and Education, and in South Africa it is the Minister of Transport. So far as I

know, there is no other country in the world with a separate Minister of Civil Aviation.
We have given a great deal of thought to this matter, and it is our belief that, as civil aviation is essentially, and will become more and more, a matter of transport, it ought to be in a merged Ministry of all civil transport. I think it is fair to say that it was always in the minds of many people, even at the start, that this would eventually happen, but there was much preliminary work to do and many foundations to lay which were of a specialised kind involving, incidentally, a great deal of travelling which it would have been difficult for a Minister who had any other responsibilities to undertake. It was clearly and absolutely right to create a separate Ministry. I believe the former Government were equally right to continue a separate Ministry and, if I may, without boring the House, I will recount one or two reasons for that belief as I go along.
There have been seven Ministers of Civil Aviation, I myself being the seventh. All except my right hon. Friend the Member for Renfrew, West (Mr. Maclay) and I were Members of the other House. I must say I felt a certain modesty in going through the corridors of the Ministry when I recalled that five of the previous Ministers had been peers. But I can share the feeling, I suppose, with Gilbert that
No Englishman unmoved that statement hears
Because with all our faults we love our House of Peers.
I was waiting for cheers from hon. Gentlemen opposite, who never appointed anybody a Minister of Civil Aviation unless he was a peer.
All these Ministers have contributed to the story of the Department of civil aviation. By common consent, Lord Swinton, partly through his own character and drive and partly because he was the first Minister, laid the foundations of Commonwealth and international co-operation and made a unique contribution. Lord Winster designed the Civil Aviation Act which set up the Corporations, which have now, I think it is agreed, a unique place in the prestige of this country and have certainly come to stay. Lord Swinton also continued the negotiations which led to the Bermuda Agreements, the first of


the bilateral agreements, a pattern which has now been followed in many other places.
He was followed by Lord Nathan, another nominee of the party opposite, to whom I was particularly indebted in that he created the Air Transport Advisory Council, which now, under a rather different directive, is giving the present Government, the industry as a whole and the travelling public very great help. Then came Lord Pakenham who was Minister for three years, over one-third of the total period of the life of the Ministry of Civil Aviation. I hope that, as an old friend, I may be allowed to say that, apart from his work for the Corporations and his creation of the associate company idea, he left behind him everywhere a feeling of respect and affection which it would be very hard to emulate and impossible to exceed.
As for the Parliamentary Secretaries, there have been a number to whom I should like to make brief reference. There was my hon. Friend the Member for Stroud and Thornbury (Mr. Perkins) who had originally put down a Motion on the Order Paper tonight asking for an inquiry into this matter before the merger was carried out. We know that my hon. Friend has been for long a fighter for civil aviation. I remember not long after I entered the House of Commons hearing him make a very formidable speech asking for another inquiry to be set up in order, as he said at the time, to release civil aviation from the stranglehold of the air marshals.
He came to this House one afternoon and asked, as he himself said, like the daughter of Herodias, "I come to ask the House to give me the head of the Secretary of State for Air on a charger." It certainly was a remarkable speech. It is well worth re-reading now, and I have done it lately. It was seconded by the now Lord Brabazon, who described his predecessor's speech as an aircraft philippic. It led to the Cadman inquiry and all sorts of changes. My hon. Friend has asked for an inquiry now before we merge the two Departments, but I believe that the situation today is different. We now have the information that we need and we also have the experience that we need to justify us in coming to our conclusions.
My hon. Friend was followed by Mr. Ivor Thomas, who did a great deal of good work, and then by the two hon. Gentlemen opposite the Members for Wellingborough (Mr. Lindgren) and Uxbridge (Mr. Beswick). The hon. Member for Wellingborough, according to Lord Pakenham in his recent book, believed that attack was the best form of defence. We who suffered under his thrusts in previous years can agree on that. Certainly he brought his general transport knowledge to the help of the Ministry of Civil Aviation, not a bad pointer to the final resting place of his own main interest. The hon. Member for Uxbridge, a pilot himself and, I believe, chairman of the Labour Party Civil Air Committee, soon satisfied the House of Commons, according to Lord Pakenham, that the late poacher had not lost his critical apparatus with the assumption of the gamekeeper's gaiters. I believe that those of us who have been engaged in civil aviation have on the whole kept party politics as much out of this sphere as has been possible in the case of any major industry, and a great deal of credit is due to the two hon. Gentlemen whom I have just named.
Since October, 1951, the two Ministries, though separate, have had one Minister, but in April, 1952, a second Parliamentary Secretary was appointed. I, since I have been Minister, and the same is true with regard to the first appointment by my right hon. Friend the Member for Renfrew, West have had the invaluable help of the present Economic Secretary to the Treasury and now the present Parliamentary Secretary to the Ministry of Civil Aviation. Under our proposal there will continue to be two Parliamentary Secretaries, one dealing with transport and one with civil aviation. This was made quite clear in the Prime Minister's statement on 26th February.
As I have said, there has been one Minister since October, 1951. Now the time has come to carry out the merger which events so clearly foreshadowed. If there are critics in the House and I take it that there may be, I should like to say this: I can see the argument for a separate Minister solely devoted to the promotion of civil aviation. So far as I know, no other country has such a Minister. It can be argued, and I have no doubt that the argument can be


sustained, that there is surely no case to continue definitely with one Minister and two separate Departments. The Government decided to work by stages and judge by the lessons of experience.
We have now had one Minister responsible for over 18 months and we are satisfied, not necessarily with the Minister, but with the working of his Departments, and we intend to continue that arrangement. This, in our view, does create a strong presumption in favour of the merger. There may be overriding reasons against it which would destroy that presumption, but are there any such reasons? The original reason for the creation of a separate Minister was that civil aviation, after the concentration on air in the war, was an infant industry. That problem still remains of importance, indeed, of growing importance, and our prospects in civil aviation are, I think, quite brilliant. I would pay tribute to all parties and, above all, to the technicians in the industry for this fact. But from the administrative point of view things are settling down. No one now disputes that there ought to be Corporations and in so far as that means the swallowing of words which some of us may have used before, we accept the mild reproof or whatever form it may take.
The Corporations have won the confidence of flying people all over the world. We believe that they should be subject to continuous competition, and I think it is a good thing that that should be so. We hope that with the Comets, Britannias, Viscounts and Elizabethans they will enter better financial times. The independence which they now have is thoroughly acknowledged in civil aviation, and the working of the new policy through the Air Transport Advisory Council is going remarkably well.
Internationally, 60 different countries now belong to the International Civil Air Organisation. In the case of the International Air Transport Association, the operators' own organisation, 95 per cent. of all the world's scheduled traffic now travels along lines operated by their members. In the Commonwealth, although much remains to be done, the general framework of civil air co-operation is now established. The pattern of bilateral arrangements has been reached and a large number made. The Ministerial need there is much less than it used to be.
In aerodrome policy, we have pruned down to a smaller number the aerodromes that our predecessors thought necessary—all State-owned aerodromes. The pattern of London and Prestwick—the first and second international aerodromes in the United Kingdom—has been created. In technical development and airways system considerable advances have been made in the last few years. These are, like the problems I have to deal with in the spheres of rail safety, road safety and air safety, no longer unique. They have fought their way through to a better recognition and can be fairly dealt with in the merged Department. The work is still quite vital, but we have passed the nursing stage and now considerations of administrative efficiency must play their proper part.
Are there any reasons against this step on the grounds of administrative efficiency? To my mind all the arguments are the other way. I am continually faced with problems over the various forms of transport for which in my dual capacity I have hitherto been responsible, all of them making claims on the limited material resources at the same time—trooping by civil aircraft or by sea, lower rates by B.E.A.C. to Scotland, preceded by lower rail rates by B.T.C. by the "Starlight Special," the opening of the new Dover ferry last week for motorcars, the great air ferry crossing the Channel regularly now. In this and many other fields a single Minister, devoted to getting the public the service it needs, seems surely the best conclusion.
There may be some economies, I hope there will be. There will certainly be some, but I would not put them very high. They will be in accounts and establishment and to some extent in finance. They will be in these kinds of central services and, as time goes on, they may well increase. Everybody knows that however hard those responsible may work, two separate Departments, each with their own independent pride, are bound to cost a good deal more in all sorts of unexpected ways than a larger Department covering the joint field.
I recognise that this is a formidable task for any Minister to have to discharge, but we ought to see it in perspective. All of us engaged with transport, whether we are in civil aviation or in road or rail or ships, are under the Ministry of Transport. If this merger is carried


out, in the field of personnel the Ministry of Labour, in non-industrial personnel alone, will be two and a half times our size, the Ministry of National Insurance three times, the Admiralty three times, the Air Ministry two and a half times, the War Office and the Ministry of Supply nearly four times. Anybody applying their mind to this problem would agree, I think, that we have arrived at the right conclusion.
It may be said that no Minister can cope, in periods of violent controversy, with so many problems. I do not deny that, speaking personally, sudden immersion in the Transport Act and the new policy on civil aviation gave me a good deal of personal strain and some considerable anxiety. The task has been made much more difficult by the fact that my two Departments have been in two separate buildings a long way apart. It will be enormously simplified by the merging of the Departments in the physical sense, as far as possible in the one building.
A large number of devoted people will be moved from Ariel House to Berkeley Square. It will not be possible to move the ground services because there is not room to do that. Anyhow it is highly important to have the ground services of the Department of Civil Aviation, as the White Paper says, organised in such a way as to permit a rapid adaptation in an emergency to Defence needs. Nevertheless, I and my successors will have with me the Controller of Ground Services with other senior officers in both Departments engaged in a multitude of responsibilities for transport by road, rail, sea and air. Each of these Departments, through their officers, will bring to the other great advantages. The impact of the jet age, the turbo-prop and the turbo-jet, on older forms of transport will not do any harm to any of us in the Ministry of Transport.
The direct experience of many problems—of finance, a great headache in civil aviation; the patient and often unspectacular planning and achievements in road and rail; the continual and often unsung running of the railways day after day—will do no harm either to any of us in the Ministry of Civil Aviation. All over the field of transport we shall all have the advantage, which only the

present Ministry of Transport has, of the knowledge of what is happening at sea and the many responsibilities at sea for which the Minister over the whole field will be responsible.
General policy to promote the welfare of the Merchant Navy; all their international duties and rights; the registration of ships; the problems of safety at sea, which are by no means solved; the well-being of officers and men of the Merchant Navy, and many coastal services—these are shipping problems. Shipping does not appear in the joint title of the Ministry of Transport and Civil Aviation. It has not appeared, save for a brief period as a separate Ministry in the war. Those in the shipping business know, however, that their role is vital and their place in our hearts quite secure.
Any Minister charged with responsibilities of this magnitude will need a good staff, and I should like finally to commend the proposal to the House with these words: that having served in a number of Government Departments, I can say with sincerity and gratitude that in the two Departments that, I hope, after tonight will be one, although the actual date will be October, there are as fine administrators and public servants as anywhere else in the world.

9.32 p.m.

Mr. F. Beswick: At times I thought I was at a school prizegiving. The Minister must have had a very agreeable time handing out the prizes and bouquets, and I must express appreciation for the small bunch of posies that he offered to me. I am glad to be able to agree with the right hon. Gentleman in some matters, because it is not often that I am able to put myself in that position. I should like, however, to associate myself with the tributes he paid, at any rate, to the Ministry with which I had some connection.
I also agree with the right hon. Gentleman's historical narrative of the events which led up to the creation of the Ministry of Civil Aviation. As he said, civil aviation affairs were, originally, the responsibility of a special directorate at the Air Ministry. The opinion was then very widely and deeply held that not until civil aviation affairs were taken completely out of that Department and given


a separate Minister would they get the allocation of men, money and materials which they deserved. I suppose we must be grateful that it is not the intention of the Government to put the Department back into the military sphere again.
Ultimately, therefore, a separate Ministry of Civil Aviation was established. In his prizegiving the right hon. Gentleman might well have remembered the part which he himself played, as Parliamentary Secretary to the Ministry of Aircraft Production, in piloting the Bill which, I believe, set up the Ministry of Civil Aviation in 1945. The wheel appears to have turned a circle, and now the right hon. Gentleman is to some extent defacing what he helped to create.

Mr. Lennox-Boyd: My particular contribution was in trying to put forward proposals in the House under which the railways, shipping and the aircraft industry would work together, a form of integration which would have been really effective but which was prevented. I am sorry to say, by our successors.

Mr. Beswick: I was considering the speech which the right hon. Gentleman made on the Second Reading of the Bill after it had been introduced by Sir Stafford Cripps who, I notice, said that the objective of the new Ministry was to provide a much firmer foundation on which to build the future supremacy which we must get in civil aviation.
I agree that it would be churlish in the extreme on this occasion if anyone in the House endeavoured to minimise the effort, and, indeed, the success, which has attended the efforts of the Ministry and the men and women who composed it in moving towards the objective which was set before them. After all, it is only eight years since that Bill passed this House—not much more than the period between conception and operation of a modern aircraft—and the position has changed a great deal in those eight years. No one now need be ashamed to speak of British civil aviation, no matter to what part of the world he goes. That goes for aircraft and the operation of aircraft.
It is not inappropriate to remind ourselves of some of the duties that this new Ministry undertook. I think that the Minister might well have mentioned safety regulations. There is a whole field of safety regulations and in no other case do

circumstances change as they do in this field of activity. There are new engines, new aircraft, new metals, new speeds, the new development of radar, new methods of control—almost every month science brings in a new item which has to be woven into the general pattern of safety regulations and airport control methods. I cannot think that the Minister has had too much time to consider these methods in the last year.
I would remind the House, as I have before, that the network of British air routes is not determined by technical developments alone. Traffic routes are dependent upon political negotiations and it would be wrong not to recognise the work done over the past eight years by that Department whose future we are considering in securing traffic rights and helping to build up the network of routes over the years. Nevertheless, it is true that there has been this idea that ultimately the Ministry responsible for civil aviation would be merged into one comprehensive Department responsible for all forms of transport.
I was very interested to hear that the right hon. Gentleman considered dissolving the Ministry of Transport. I think there is an argument for that in much the same way as many people now think there is an argument for the Air Ministry taking over the Admiralty. My own views on this matter were set out five or six years ago, when I suggested that the developing pattern of policy should be the responsibility of a semi-independent organisation constructed on the lines of the Air Registration Board, except that we would have had workers represented on that body. While the general policy would have been laid down at that level the execution of policy in particular spheres would be the responsibility of the separate executive boards. With that satisfactorily arranged, the M.C.A. would have properly joined up with its fellow transport department. We have not chosen to follow that line of development but, even so, the merger is one which we have to contemplate.
The important question is whether it is the right time. Despite the beguiling terms which the Minister has used, he has not convinced me that this is the right time. It seems a most extraordinary time to choose. Can we really say that the


organisation of surface transport is running so smoothly and the air Corporations are so well established that now is the time that we should reduce their representation in the Government? Can the Minister really claim that? Can he claim that the Transport Act, 1948, is now being fully, smoothly and satisfactorily implemented?
Can he say the two air Corporations are now safely out of the "red"? Can he say that their respective responsibilities are clearly defined and that their ability to meet foreign competition is such that they no longer need a separate Minister to serve them? Of course he cannot. Can he say that he was willing and able to discuss aviation problems when representative bodies of workers wish to meet him? I am sure he was willing, but he has certainly not been able. There may have been a time in the recent past—

Mr. Lennox-Boyd: The hon. Gentleman is making rather unspecified charges of a wounding nature. There are certain constitutional proprieties which must be observed, as I am sure they were observed under the late Administration. I do not know what the hon. Member is talking about. I have never been unready or unwilling to receive representative bodies of trade unionists, or others, if it were a proper delegation. What has the hon. Gentleman in mind? I wish he would tell me.

Mr. Beswick: If the Minister had been listening he would probably have followed me more closely. There is no question of constitutional rights here involved. In the past six or seven years, under a Labour Government, if the workers wished to meet the Minister, either formally or informally, to discuss any matter, it was always possible to arrange such a meeting. But the Minister knows full well that within the first 12 months of the present Administration there was great dissatisfaction among the unions.

Mr. Lennox-Boyd: No.

Mr. Beswick: Others may speak in greater detail—

Mr. Lennox-Boyd: I wish they would.

Mr. Beswick: —but the Minister knows very well that the unions have passed a resolution deprecating this change.

Mr. Lennox-Boyd: The hon. Gentleman has made a very definite charge that I did not receive deputations of trade unionists—or, rather he said that I was not unwilling, but unable through other preoccupations, to receive deputations of trade unionists. I do not know to which particular deputations he refers. If he would only tell me I would have a checkup made to see what actually happened at that time. I am, or the Parliamentary Secretary is, always ready to receive a properly constituted body. But I cannot say here and now that anyone who wishes to see the Minister has absolute right of access, any more than would have been the case in the time of my predecessors.

Mr. Beswick: Perhaps the Minister would be good enough to look up the number of occasions on which he has met representatives of the unions during the past 12 months. I think that that was raised before in this House.
Let me make it quite plain that no one has said that the Minister or his predecessors was unwilling to meet them. But there has always been difficulty in finding the necessary time. We are discussing the time of the right hon. Gentleman and the way he has been spending that time. As he has admitted he has been going through a time of great stress. He did pilot a major Measure through this House in the shape of the new Transport Act. He showed considerable skill and great stamina during that time. But he cannot say that he has had a lot of time for considering the administrative functioning of his Department during that period.
He cannot say, either, that he has settled any transport problem. In fact, this new Transport Act settled no problem, but created a good many. Although he said that he was hoping to have more time to look round there are, in the new Act, over 60 separate references to the Minister, under which it will be his duty to consider and to give consent to changes or to initiate new Orders. We still do not know what is to be the structure of the railway system. The whole future of road transport is in the melting pot. How can the Minister say at this critical period that he needs less time to ponder over the affairs of road and rail transport and to safeguard the national interest?
Similarly, with civil aviation. The right hon. Gentleman paid an appropriate tribute which we appreciate to the work


done by his noble predecessors. Things were settling down under their benevolent reign. There was steady, definite and discernible progress. What has been done by the present Administration? It has introduced a whole series of uncertainties. I am not trying to say that their new policy is right or wrong, but I say, quite plainly, that the changes of policy will entail a good deal of additional work. The number of matters needing the attention of the Minister in the first six months may well have been dwindling, but in the past year the attention they needed has been more and not less.
It seems to me quite impossible for the Minister to say that he is up-to-date with the business of the two Departments and has time to spare, because in every matter with which he is concerned there is evidence of delay. One need only take HANSARD for the week in which this Order was tabled. Let us look at Volume 516, for Wednesday, 17th June, when Civil Aviation Questions were dealt with. A number of Questions were asked, to which no definite reply was given. My hon. Friend the Member for Preston, South (Mr. Shackleton) asked about airports in the London area, and was told:
I regret that I cannot at present forecast dates."—[OFFICIAL REPORT, 17th June, 1953; Vol. 516, c. 953.]
I asked the right hon. Gentleman about Gatwick Airport, and we all know the difficulties there, but the fact remains that no decision has yet been given on that matter. I also asked about fog dispersal at London Airport, and the answer was that the Minister was unable to give any decision on that matter. There was another Question on the same day put by my hon. Friend the Member for Preston, South, on the important matter of rearward-facing seats, and the Parliamentary Secretary had to say again that no answer could be given, and refer my hon. Friend to the negative answer which had been given to me a week or two earlier.
If we take transport and the time the Minister spends in that capacity, we get the same answer. There was a Question by several hon. Members about a committee of inquiry, and the Minister replied that he was not yet in a position to announce the membership of the committee.

Mr. Lennox-Boyd: I would point out that it takes longer to pick good people than bad.

Mr. Ernest Davies: It is a pity the right hon. Gentleman did not take longer.

Mr. Beswick: We saw the reception given to the announcement this afternoon.
There was another Question from my hon. Friend the Member for Enfield, East (Mr. Ernest Davies), who asked about development plans for improvements in North London, and the Minister had to say that he was not yet in the position to make a statement. There were several Questions on a matter of some urgency, on which the Minister had to say that he had not yet made any appointment. There was a further Question by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) about the Road Haulage Executive, on which the Minister had to say that he hoped to make an announcement on the subject very shortly. And so we can go on.
The fact is that, in both civil aviation and transport affairs, if we look at the Questions in HANSARD, delay and inaction are the themes running all through the affairs of both Departments. "Not yet" is the answer we get on all these matters, and they are matters requiring decision. Of course, the Minister does not say that these are unimportant matters; we all know that they are very important, both in road and rail transport and in civil air transport.
We have had certain assurances from the Minister, but we would like to have in the plainest terms the assurance that there is absolutely no intention to lower the status of civil aviation. We are now reaching a time when the technical needs of civil aviation are diverging sharply from the military needs. In engines, in the new air transports, and especially in the development of the helicopter, we want the proper priority to be given to civil equipment, and we should like to have an assurance from the Minister that his voice in the Cabinet or in Government circles will be heard in favour of the proper priorities for civil air transport.
In spite of all the difficulties that I have indicated, there would still be an argument in favour of this merger if it can be shown that substantial economies might result, but we have been told nothing very convincing about that. It is hoped that some economies will result, but we have not been told anything definite about


them. If savings could be effected by the use of common services—accounts, finance, establishment, and so on—I do not think there is any reason why those savings should not be effected without the complete merger of the two Departments.

Mr. Charles Ian Orr-Ewing: Would the hon. Gentleman not agree that in any case one is saving the salary of the Minister, which, in this case, was £5,000?

Mr. Beswick: I shall deal with that point. I do not think we ought necessarily to take it for granted that the saving of a Minister's salary is a net saving to the taxpayer. I hold the view that it might well be advantageous to have a greater ratio of elected representatives to a given number of civil servants. In that way we might get a true economy. I understand that the right hon. Gentleman is an elected representative.
There is a too ready acceptance of the view by some people—a rather naïve view—that because a Department is bigger it is necessarily more economically run. I do not hold that view. On occasion, it may be much easier to secure the necessary economies if a Minister has a certain amount of time to spare to look into the administration of his Department.
In the past year the Minister has done two major things which he might very well not have undertaken. He has completely upset road and rail transport, and he has introduced a new policy into civil aviation, but he has not shown us that there will be any substantial direct economy as a result of this merger. The merger comes at a time when the right hon. Gentleman requires more time for the administration of his Department. It is not wanted by the transport people, it is opposed by all the unions in the air transport world, and there may well be evidence of that coming from the National Joint Council in the future. The fact is that this merger is an extreme case of mistiming and is further evidence of the capacity of the Government to get their priorities completely out of order.

9.52 p.m.

Mr. John Maclay: I had hoped, when the hon. Member for Uxbridge (Mr. Beswick) rose, that as far as is reasonably possible this particular

stage in the development of civil aviation as part of transport as a whole would have gone through with a minimum of controversy. One could expect certain comments and questions, but the hon. Member for Uxbridge has made a monstrous speech.
At the beginning, he accepted in principle that, sooner or later, a merger was almost inevitable. He then questioned the timing, and if he had done so on serious grounds one would have been impressed. But he then gave a series of Question time quotations from HANSARD which, as an attack on the Minister, was most unwarranted. If anyone cares to look up HANSARD for 1945 to 1951 he would find a stream of similar answers. When a Minister says, in reply to a Question, that he is not ready to give an answer, that is not evidence that he has not the time or is unwilling to deal with it. To be honest, in some cases between 1945 and 1951 it would have been far better if some Ministers had said that.
I wish most strongly to defend my right hon. Friend, because I know the job he had to take over when, unfortunately, I had to give it up. I know the concentration that he has given to it and the speed with which he has dealt with a great many difficult things, and I think it necessary to put that on record. I do not intend to make a lengthy speech this evening, but I want it to be clear that I believe that the decision which has been discussed tonight is right, and I think that the timing is as near right as any timing could be.
The Minister has made a complete case for the timing. There are problems to be solved about the railways, about road transport, and about sea transport, as there are bound to be in relation to all forms of transport. If ever there was a need to get policy into one Department and under one Minister it is in this case. Transport cannot be static. There can never be a time when one can say that everything is settled either in civil aviation, the railways, sea transport or road transport. New problems will always be arising, and it is a question of judgment whether this month, next month, or about now is the right time to start co-ordinating policy to cover all the major problems which have to be faced as to the relative parts which these great branches of transport are to play.
Civil aviation, internationally as well as nationally, has been dry nursed, but sea transport has not. Civil aviation is a new industry coming up, but some time, fairly soon, someone will have to decide whether sea transport is to be subjected indefinitely to air competition. Sea transport pays all its own expenses, but civil aviation is still in a very privileged subsidised position. I am not saying for a moment that is necessarily wrong, because civil aviation is relatively an infant industry, but it is infinitely better for one Minister to be responsible for balancing these matters and giving a fair judgment than to have two separate Ministers fighting a sort of battle. We shall not get the right answer to delicate problems in that way.
The ideal thing is to get a balanced judgment from one Minister who knows he is responsible and has to do his best to achieve a balanced policy and perhaps to allocate priorities in face of shortages of materials, whatever they may be. I hope (hat we shall come to a decision which will mean that transport in all its forms can go forward in Britain with every hope of maintaining its position world-wide in a way that will benefit all British transport, whether by rail, road, sea or air.

9.58 p.m.

Group Captain C. A. B. Wilcock: In my very short speech I shall not attempt to follow the points made by the previous speaker, except to say that I did not notice any personal attack upon the Minister. [HON. MEMBERS: "Oh."] We know that the Minister of Transport and his Parliamentary Secretary are very interested in aviation, and any attack that we are liable to make would be against their policy.
I believe firmly that this de-grading or down-grading—I prefer to say de-grading—of the Ministry of Civil Aviation is wrong and if it were to go to a vote I would have to vote against it. That is not a party line. I recognise that the previous Minister of Civil Aviation made exactly the same suggestion that at some time or other his Department and the Ministry of Transport should be merged, but, again, I personally would have voted against that.
It is clear to me from the White Paper that the Government regard civil avia-

tion as just another means of transport. So does the right hon. Member for Renfrew, West (Mr. Maclay). That is much too limited a definition. Aviation is a fundamental development in the progress of civilisation. To shackle its progress by tying it to road and rail transport, however loose those shackles may be, reveals a complete lack of understanding and appreciation of aviation. To me, these proposals indicate that the Government do not grasp the potentialities of aviation and the influence that it can have economically on us as a nation. Six months ago the Parliamentary Secretary to the Ministry of Civil Aviation, whom I see in his place, informed the House that he was shutting down nearly 20 flying training schools for reasons of economy. Today, the Minister of Civil Aviation tells us that he is shutting the Ministry of Civil Aviation. [HON. MEMBERS: "No."] All right, degrading or down-grading it. [HON. MEMBERS: "NO."] Well, reorganising it. This is a retrograde step.
The present has been said by hon. and right hon. Members to be another Elizabethan era, an era of progress and development in the air, as it was an era of progress on the seas during the days of Elizabeth I. The proposal by the Government is not a great contribution towards that Elizabethan spirit. It is no use arguing that this is just a matter of reorganisation and is of little account. It is a blow to the prestige of aviation. It will further depress, bewilder and unsettle many who are engaged in this great new industry. Hon. Members opposite who have an interest in aviation know that what I am saying is true.
Civil aviation requires the full attention of a Minister and, what is more, of a Minister of Cabinet rank. Our hope of survival economically in face of competition from other nations depends largely upon our ability to utilise the air in future as we did the seas in the past. We became a great Power not solely because we were a great manufacturing nation, but because we were also a great maritime nation and were able to carry our goods throughout the world. It is in the carriage of freight that we must expect the greatest development in the air in the future.
It will be our ability to transport our products speedily from the factory and


the works to the consumer that will turn the scales in the overseas markets. That is becoming more feasible with the development of the helicopter. That is the kind of problem which should be claiming the attention of the Ministry of Civil Aviation as a specialist subject of immense importance to our economic life in the future.
The carriage of freight by air will equal if not exceed the progress that has been made in the last 10 years in the carriage of passengers. When I first flew the Atlantic as a passenger 10 years ago it was a matter for those on the ground to wish good luck on the take-off. Incidentally, I wonder that the Minister of Civil Aviation does not find some other word in place of that clumsy word "takeoff." Now things are very different indeed. Transatlantic travel today is less difficult than getting into New Palace Yard. Last year, 430,585 people crossed the Atlantic by air. That number was much bigger than the number of those who crossed by sea. Yet it is at this time, when that kind of progress is being made, that the Ministry of Civil Aviation is demoted.
I should like to consider this question of economy, because there can be no other argument for this change except on grounds of economy.

Mr. Lennox-Boyd: The hon. and gallant Gentleman must have written his speech before I made mine. I made no such case.

Group Captain Wilcock: If the Minister did not make the case for economy, the White Paper does, and, presumably, he is responsible for the White Paper. Of course, we know that there will be no economy at all in this merger, and if there is an economy by using Ministry of Transport officials, surely there is redundancy at the moment in the Ministry of Transport. If I am wrong, perhaps the Minister will say so.
Can this work at the Ministry of Civil Aviation be imposed on Ministry of Transport officials? The Minister will see if he looks at the Estimates that 697 people at the Ministry of Civil Aviation are employed on headquarters staffs. I should like to know whether the work of those 697 persons is to be undertaken by

the Ministry of Transport. If not, it is perfectly clear that there will be no economy.
In general this is an entirely retrograde step and the whole approach is wrong. Now is the psychological moment to encourage civil aviation. There are so many problems in civil aviation at the moment which deserve and require encouragement. There is the development of the helicopter. There is the problem of the better use of municipal airfields. There is club flying; and I observe, in passing, that out of its £14 million the Ministry made a grant of £40,000 to clubs and glider flying last year—£40,000 to foster flying among the youth of this nation in this Elizabethan era. What encouragement!
There is co-operation within the Dominions. There is the training of aircrew and groundstaff. These and other problems, in my view, justify the existence of a separate and individual Ministry staff with imagination and enthusiasm. That would represent progress in aviation.
It certainly cannot be said that the following statement in the White Paper is an encouragement to aviation:
… the subject no longer needs the undivided attention of a separate Minister.
If that is the view of the Government today, and these are the words used, then I feel that no one in aviation in this country will ever again have confidence in the present Government.

10.3 p.m.

Air Commodore A. V. Harvey: I agree with most things that the hon. and gallant Member for Derby, North (Group Captain Wilcock) says about aviation, but I must say that I completely disagree with him tonight. I have felt for a long time that the Ministry of Civil Aviation, which, I think, we all agree, has done a very good job of work, has been the Cinderella of Ministries. From my limited experience in this House, I believe that a Cinderella of Ministries is always on a very poor wicket from the point of view of getting staff and money.
Over the last 20 years civil aviation has had a very chequered career. Before the war it was in the hands of the Air Ministry. I quite agree that that was wrong, and my hon. Friend the Member


for Stroud and Thornbury (Mr. Perkins), who made a commendable speech at that time, undoubtedly did great service to civil aviation. I feel that it would be wrong to disturb the basic machinery of adminstering civil aviation, and I do not think that that will be done under the proposals which we are discussing tonight.
I should like to make one suggestion to my right hon. Friend, and that is that he should delegate more of the administration of civil aviation to the Air Registration Board. This is an excellent body, consisting of men who give great service, all told, for £22 a year, who carry out a magnificent job and are respected by all the nations of the world for their standards of safety and airworthiness. If my right hon. Friend could see his way to delegate more administration and authority to that body, or similar bodies, the industry might be better off.
When a merger like this takes place, much depends upon who is in charge of the Ministry. Had this merger taken place four or five years ago, before the days of Lord Pakenham, I should have been extremely unhappy about it, but my right hon. Friend has made aviation, particularly civil aviation, his personal study for a great many years. He was chairman of the Conservative Party Civil Aviation Committee, just as the hon. Member for Uxbridge (Mr. Beswick) was chairman of his party's committee, and I am satisfied that with him in charge the industry will not suffer but will gain, and that with him and his colleague, the Parliamentary Secretary, who will give his undivided attention to civil aviation, the administration of the industry will be better than before.
I quite agree that civil aviation requires some nursing, but not as much as it has had in the past. We have to educate not only the operators of the aircraft but people as a whole, and make them realise that flying is a normal means of transport. The sooner we do that and get the costs of flying on to a really businesslike basis, the better it will be for everybody. I do not know that I subscribe to my right hon. Friend's view that the Corporations are on sound foundations. For airworthiness and safety they could not be better, but we must remember that the two Corporations are still losing £8 million or £9 million a year between them.

Mr. I. Mikardo: No.

Air Commodore Harvey: It is several million pounds a year.

Mr. Mikardo: Perhaps the Minister will put his hon. and gallant Friend right.

Air Commodore Harvey: Perhaps the hon. Member will correct me if I am wrong. The loss is certainly up this year, compared to last year. We had all hoped that there would have been a smaller loss this year. Nevertheless, I do not want to decry the Corporations. We should all do what we can to improve them, because we know they are here to stay. My right hon. Friend, however, is ultimately responsible for the Corporations, and I believe that this merger will help, because we shall be inclined to get more businesslike methods into their administration, through the knowledge of shipping and road transport which will be available.
I should like to know if there is to be a saving when the merger takes place. I think there will be, but we have to remember that civil aviation is still expanding, and whatever saving may be made may be offset by increases in the staff necessary to administer the ever growing industry. Aviation can render a great service to the economy of Britain in the years to come. I am satisfied that my right hon. Friend and his colleagues will not neglect this great industry.
I shall watch the matter as keenly, from my own small position, as I have hitherto under the Labour Government, but I should like to wish the merger, the Corporations, and all those connected with the industry, every success. I wish them well under the new administration, and I believe that they will go from strength to strength.

10.14 p.m.

Mr. I. Mikardo: I shall make only two comments on the speech of the hon. and gallant Member for Macclesfield (Air Commodore Harvey). The first is with regard to his reference to the Air Registration Board. The Minister will be the first to recognise that the question whether, under the new dispensation, more or less work is given to the Board, has nothing to do with the question whether the Ministries should be merged, which is the matter before us this evening.
The hon. and gallant Gentleman, in commending the idea that further work should be given to the Board, said that this was a body which was held in universal esteem all over the world. I agree that it is a body which deserves to be held in universal esteem, and I only wish that it were. The hon. and gallant Member will himself recall that it is not so long ago that the American civil aeronautics authorities declined to recognise a certificate of the Air Registration Board for the Comet as carrying any weight for the possible use of the Comet in American services.

Mr. Lennox-Boyd: I do not think that that is a perfectly fair way of describing the various discussions which have taken place. The attitude has been that America has not had adequate experience yet to give a blanket authority, but the Americans are prepared to judge each case on an ad hoc basis.

Mr. Mikardo: I do not want to go too far into this matter because it is not the subject we are discussing, but I assure the right hon. Gentleman, as I think he knows is the case, that I have followed every word and every line on this matter very closely indeed. What he has said has been said several times before and, if he will forgive me for saying this—I mean no offence—it is rather a whitewashing formula. The plain fact of the matter is, as he knows and I am sure regrets, that there is considerable obstruction to the use of the Comet in the United States.

Air Commodore Harvey: While I agree with the hon. Member, because I have questioned my own Government about granting certificates of air worthiness to the Comet, in my judgment that is not a reflection on the Air Registration Board. To take the extreme case, the only reflection it could be on our American friends is that they are inexperienced, that they may be several years behind and that they may be somewhat jealous.

Mr. Mikardo: We are going off at a tangent here. I was not saying anything to endeavour to controvert what the hon. and gallant Gentleman said but was supporting the tribute he paid to the Board, adding that I wished they were held more universally in esteem,

especially on the other side of the Atlantic, than they appear to be.
The only other observation I wish to make on his speech was that the figure which he gave for the annual rate of loss of the Airways Corporations was inaccurate to the extent of nearly 200 per cent., which is not bad even for him. It is not quite a record of factual inaccuracy for him but it is approaching it, and I congratulate him on it.
Turning to the Motion, unlike right hon. and hon. Gentlemen on both sides of the House who have spoken—I do not pretend to speak for anybody but myself—I cannot work myself up into a passion about it one way or the other. I think it is unnecessary to pretend that any enormous advantages can accrue from the merger and it is equally unnecessary to pretend that any great disasters can arise from it. No one could possibly quarrel with the way in which the Minister put the Motion to the House. He appeared to do his best—and I think he did very well indeed, if I may be allowed to say so—to hold the balance fairly between the pros and the cons at each stage of the argument but—and I suppose he had no alternative in the circumstances—I think he was overstating the advantages which might be expected to accrue from this merger.
On the other hand, if we take the opposite view, we are not dealing with the argument for or against two separate Ministers but with the argument for or against two separate Ministries, as the right hon. Gentleman himself pointed out. When we have put the two Ministries under one Minister, it is clear that we have already gone a very long way towards a merger, and what is now being done is the second stage; and if one feels passionately about providing a separate place in the sun for civil aviation, the time to feel passionately about it is not so much at the second stage as at the first stage, when the two Ministries are put in the charge of a single Minister.
In my experience, all these questions of departmental and inter-departmental mergers—the same thing applies whether they be mergers between Departments of Government or mergers between departments of a commercial or industrial organisation—remain marginal questions. What is important is not the formal question whether one has two departments or


whether one has one department with two sub-departments but the working relationship in day-to-day practice between the various people who carry out the work.
The titles of people matter much less than whether the definition of the allocation of responsibilities between them is set out clearly so that everybody understands it. One may have all sorts of grandiloquent departments with all sorts of people having grandiloquent titles. I am always rather staggered at how much store some people, in both public and private enterprises, set by their titles. One can sometimes get a man for £200 a year less if one calls him a general supervisory manager or something like that. I would sooner have the £200 a year than the title. What matters is not the formal structure of departments but the clear-cut definition of relationships and responsibilities between the actual executives who carry out the work. That is why, to use an Americanism, I cannot get "burned up" about the Motion one way or the other.
From a mere examination of the issue, I suggest that what my hon. Friend the Member for Uxbridge (Mr. Beswick) has said about the timing of the operation has been far too easily glossed over on the other side of the House. I thought that the right hon. Gentleman the Member for Renfrew, West (Mr. Maclay), in particular, rather swished some very real problems away as though they did not exist and did not matter. I am not quoting his own words, but the effect of what he said was, "There still remain one or two little problems in rail transport. There still remain one or two little problems in road transport."

Mr. Maclay: The hon. Member said that he did not intend to quote my words, but he has said "little" twice although I did not use the word once.

Mr. Mikardo: The right hon. Gentleman was a little carried away by his indignation against my hon. Friend, but if in the cold hard light of the morning he will examine in the OFFICIAL REPORT what he said he will find that he appeared to suggest that the problems remaining in surface transport at the moment are somewhat residual.

Mr. Maclay: One can always argue about timing within relatively wide limits, but the point I was making was that where one has policy development which is overlapping and will ultimately require co-ordinating, that is, roughly speaking, the time at which to act, and I believe that we have about got to that time now.

Mr. Mikardo: I took that point when the right hon. Gentleman made it, and it is a weighty point, but I was referring to something else that he said or implied, and that was that there are not any greater problems at this moment than one would normally encounter at any moment in the history of a dynamic industry. I differ from him about that.
It is true that both surface transport and air transport are dynamic industries—air transport perhaps more than any other at the moment—and, therefore, we have problems all the time, and we want problems all the time, because they are the mark of progress, but with them there are special difficulties at the present time when grave changes of policy have been introduced in both surface transport and air transport.
It would be out of order to discuss those changes of policy and to say whether one agrees with them or disagrees with them on this Motion, and I am not making any point about whether they are good or bad. Whatever we may think about them, however, no one will dispute that there are very considerable changes of policy and that they have very considerable repercussions indeed. Until these repercussions have been worked out there will be very considerable dislocation. Hon. Gentlemen opposite may think that that dislocation is worth while, and we may think it is not. However, nobody will deny that there is considerable dislocation which is likely to be very severe indeed in the next year or two.
The Minister, in justifying the original formation of a separate Ministry for Civil Aviation said that there was much preliminary work to be done and foundations to be laid. I want to put it to him that there are still foundations to be laid. The edifice of civil aviation is not


by any means bedded down on its foundations, and we have got some changes coming along, some of which have been referred to by my hon. Friends, which are as revolutionary in their own way as in its way was the very first heavier-than-air flight.
The change-over to jet propulsion is not a change of degree; it is a change of type. It is a revolution in itself. The jet aircraft is not a slightly different aircraft; it is a different instrument altogether in its operation and certainly in its maintenance. I think it is not difficult to visualise that within 10 years from now the ordinary aircraft may have completely gone out for flights of up to 400 or 500 miles in favour of the helicopter, which will mean an entirely different range, service and maintenance of aircraft.
Then there is the question of the development of freight in the air, to which my hon. and gallant Friend the Member for Derby, North (Group Captain Wilcock) referred. There are also one or two unsolved problems that the right hon. Gentleman's Ministry will have to tackle more vigorously than has been done in this country or anywhere else up to the present. For instance, what are we going to do about the noise problem? With the development of bigger jet engines the right hon. Gentleman knows that this is going to be both literally and metaphorically one of his worst headaches.
I think the right hon. Gentleman cannot be altogether happy with what he describes as the working of the new policy through the independent operators. He said it was doing pretty well, but he must know that that is not by any means a closed chapter, and that there still is much thought to be given to this matter and many problems that will arise from it.
It seems to me that, whilst one cannot really get into a passion about this matter—I cannot see any great grounds for working up a passion about it—the Minister would be well advised to consider whether in all the circumstances 1954 might not have been a better year than 1953 for this operation. I hope when the transition takes place it will take place smoothly, and that the forebodings which have been expressed this evening will not, in fact, come to pass. I have some fears that they will, because this

precipitate action may bring some of them into effect, and it may have some adverse effect upon the transport industries and upon civil aviation in particular. I hope I may be wrong, but I fear I may be right.

10.30 p.m.

Mr. Charles Ian Orr-Ewing: The burden of the attack from the other side of the House has been that this is the wrong moment to make a change, but I think hon. Members on all sides will agree that it is always the wrong moment to make a reform. I believe that in this case it is a substantial reform and the right hon. Member for Renfrew, West (Mr. Maclay) was right when he said there are a number of overlapping problems growing up which need the integration and co-ordination which one may get in a single Ministry.
How many hours have we sat in this House in recent years and heard that magical term, "integration of transport"? Here is a minor measure of integration. I agree that it is unnecessary to get hot under the collar about this matter, as the hon. Member for Reading, South (Mr. Mikardo) said, but it is something worth while. It has also been said by the hon. and gallant Member for Derby, North (Group Captain Wilcock) that we were down-grading civil aviation. Nothing could be more untrue.

Group Captain Wilcock: If the hon. Member would like to be correct, I said that it was down-grading the Ministry of Civil Aviation.

Mr. Orr-Ewing: I speak subject to correction, but it was certainly suggested to my mind that the hon. and gallant Member said that we were down-grading not only the Ministry but the whole organisation and industry of civil aviation. When we consult HANSARD later perhaps we can learn what the hon. and gallant Member said. But it is absolutely untrue to say that we are down-grading this Ministry. A reorganisation does not mean that we are down-grading a Ministry. I think the hon. and gallant Member would concede that in the Minister we have today a man who is extremely active and a great enthusiast for civil aviation. I feel that even half his time will be much more worth while than some previous Ministers have been able to provide with all their time.

Group Captain Wilcock: If a Ministry becomes a Department and not a Ministry it is downgrading of that particular formation.

Mr. Orr-Ewing: I am sorry, but I cannot absolutely agree. At different times there are different needs for different Ministries. I suppose there may be a time when the Ministry of Materials goes into liquidation, but that will not mean that we have downgraded raw materials; they will be just as essential as they always were.
I was glad that in moving this Motion my right hon. Friend did not make too much of the economies of amalgamation. I may be wrong, but I have a feeling that we shall hear the argument brought out by the Corporations that economies would be made if they amalgamated B.E.A.C. and B.O.A.C. I believe that theoretical economies can often be made by making an organisation very much bigger, but in practice the inertia of the whole business is much greater and the sum total of efficiency is much lower. But there will be economies and although they may be minor, they are worth while.
Perhaps when the Parliamentary Secretary winds up the debate he can tell us what is to happen to that magnificent modern building Ariel House. Is it to be sold—at a considerable profit I hope? Is it to be rented—at a considerable advantage to the ratepayer and taxpayer? What is to happen when the present members of the Ministry in Ariel House move into Berkeley Square?

10.34 p.m.

Mr. Edward Shackleton: Like my hon. Friend the Member for Reading, South (Mr. Mikardo), I do not feel greatly exercised about the evil or the good consequences that might flow from this measure. I must say it is extremely entertaining to hear the various reasons put forward from the Government side of the House for this series of Departmental mergers. We had a debate a little more than a week ago on the merger of the Ministry of Pensions and the Ministry of National Insurance. There, too, the Minister, in a rather gentle and disarming way, said they did not expect much in the way of savings but at least he could guarantee a career for the officials of the Ministry of Pensions.
That argument does not appear to exist in the Ministry of Civil Aviation and, whereas I would agree that there is not possible justification for continuing the present situation with one Minister and two Departments. I must confess that I believe that this whole tendency towards merging Departments represents almost a pre-election doctrinaire approach. I am not saying this offensively but that in the belief that economies and efficiency could be got if they feel obliged to go through with it; and that when the time comes they find that no really substantial economies are gained.
It seems to me that there is some contradiction between the White Paper and the remarks of the Minister because, whereas the White Paper refers to savings in costs, the Minister, in an intervention, said he made no claims for a saving. I think I am quoting him rightly, and if so, I should like to know why this change is being made. Despite what my hon. Friend the Member for Reading, South said about the managerial argument, and the principles which apply throughout industry and Government Departments, I am convinced they do not necessarily apply to Government Departments.
Here we are operating in the political field; or, at least, to some extent, and the voice of the individual Minister, responsible for his own little section, does count for more than the voice of the Minister who is covering a number of different sections; or, in other words, a section does better with an individual Minister.
On the whole, it is unfortunate at this time that sea transport, land transport and the provision of adequate roads as, for example, in Lancashire, or the encouragement of civil aviation—the Merchant Navy of the air—should all form matters to which the Minister must turn his mind. On balance, with the developments which are coming forward in civil aviation, there was some case for retaining an independent Ministry, and little advantage in abolishing it. But this is not a matter of very major importance.
I would, however, ask the Minister not to be misled, and express the hope that no future Minister will be beguiled, by the arguments of planners and integrators into simulating a beautiful pattern for transport. I believe that his own policy


with regard to land transport shows that he does not believe in integration at all and his speech tonight was illuminating when one recalls speeches which he has made on other occasions.
It must, however, lead to a holding back of civil aviation if there is always to be the need to weigh considerations of different sections of our complex transport systems, and as the right hon. Gentleman takes on his new duties I hope he will realise that civil aviation moves in such a different field, and has different problems from the old types of transport, that special consideration and priority will be given to it.

10.40 p.m.

Lord Malcolm Douglas-Hamilton: I welcome this amalgamation, and I think it is very important to bear in mind that another Ministry does not necessarily mean that civil aviation will benefit. In fact, civil aviation may flourish more in the inverse proportion to the amount of administration it receives. I think that we have had too much administration in civil aviation in recent years.
For example—and I am sure my right hon. Friend will bear this in mind—the operation of flying boats has been made utterly unprofitable in this country today. Private flying has not flourished. It has been priced and regulated almost out of existence. I hope that my right hon. Friend will pay very close attention to this matter in the future.
I well remember that in about 1926, when a Directorate of Civil Aviation was established, Sir Sefton Brancker had an aeroplane of his own. I am not suggesting that my right hon. Friend should follow his example, but it gave a tremendous boost to private flying at that time, and private flying is a very essential part of civil aviation, though it has suffered very severely in recent years.
Private flying is important as a sport, and why should we not enjoy sports? But it is also important from a strategic point of view. In the United States of America, one in every 320 of the adult population is a pilot. In this country the ratio is something like one to 6,000 or 7,000. Private flying needs a much greater boost than it has had hitherto. As

I say, I welcome this amalgamation, and I wish the Ministry of Civil Aviation well in its new environment.

10.43 p.m.

Mr. Geoffrey de Freitas: I am sure that the noble Lord the Member for Inverness (Lord Malcolm Douglas Hamilton) will receive answers on the points he has made about flying boats, and so on. I welcome his intervention in so far as it is a plea for support for private flying, because I know that the flying club movement has suffered in recent years, but I find it hard to understand how that matter is relevant to the Order before the House tonight.
The Order has been discussed, and two lines have emerged from the speeches which have been made. First, what does it do? Does it integrate, stimulate or reduce the status of civil aviation? I can only say that in the view of the people concerned with civil aviation, with whom I have discussed the matter, this move reduces the status of civil aviation to the level of a branch line of British Railways. I am very sorry that that should be so.
Second, is the timing right? The hon. Member for Hendon, North (Mr. C. I. Orr-Ewing) said that this was exactly the right time. I believe it is the wrong time. I believe that we have not reached the stage described in the White Paper. "when the subject of civil aviation no longer requires the undivided attention of a separate Minister." On the contrary, I believe that we have reached the stage in the development of aero engines, when, if our civil aviation is to prosper, we must have a Minister with the time to see that the Service Departments do not dominate their development.
The military require an aero engine which will permit of the highest possible speed, and which will stand up to battle conditions. Civil aviation is content with something not necessarily as fast, and because it can choose its flight plan, its height of operation and avoid bad weather, and so on, it can have a more sensitive and vulnerable engine. A fighting aircraft cannot choose its working conditions and must have a very tough engine.
Suppose the experts in the civil Corporations decide that for long, intercontinental operations, civil aircraft


require the axial flow engine, while the military advisers of the flying Departments decide that fighting aircraft require the centrifugal engine. What is to happen? The military, with their enormously greater requirements and need of large-scale production, will win. I am worried that there will not be a Minister exclusively devoted to civil aviation and able to impose his will to see that civil aviation is well enough cared for in the research and development that takes place. Otherwise, the military requirements will always dictate lines of research and development. With a Minister not exclusively devoted to civil aviation we should be in danger of subordinating our civil requirements in research and development to those of the military. We cannot afford that, if civil aviation is to play a very great part in the future.

10.47 p.m.

Mr. Ernest Davies: The debate has turned not so much on the ultimate principle whether the Ministries should be merged, as on the timing of the merger. Some, like my hon. and gallant Friend the Member for Derby, North (Group Captain Wilcock), are opposed completely to the merger. It is understandable, in view of the fact that he has devoted his life to civil aviation and has great experience and knowledge of the industry, that he should feel unhappy at the danger of civil aviation being absorbed by the Ministry of Transport. There was the other point of view put forward by my hon. Friend the Member for Reading, South (Mr. Mikardo) that as there is, in any case, only one Minister, we are discussing largely a matter of administration.
The view generally held on this side of the House is that it is not the right time for this merger to take place. The Minister, with his usual fluency of speech, which, to one of my hon. Friends sounded rather like a speech at a prize-giving and to me rather like an obituary speech, failed to satisfy us that this is the right time for this merger. The main reason he gave was that because there is now one Minister only for the two Ministries that created the presumption for the merger. In fact, at one moment, it seemed that the main reason for the merger was the too great physical strain

on the right hon. Gentleman in rushing from one office to another. Fortunately, the Minister appears to be of very strong physique, and possibly the extra exercise is keeping him in his normal robust health.
The right hon. Gentleman certainly did not hold out any hope of great economies and did not advance economy as the reason for this merger taking place. All he stated was that they may increase the economies as time went on. If that is so, we are entitled to ask why there is this urgency for the merger of these two Ministries. In trying to justify why the merger should take place at this time, the Minister suggested that when this was an infant industry, the Ministry of Civil Aviation was formed but that now the industry had passed the nursing stage. I do not know precisely what are the "seven stages of civil aviation," but we do not want this infant, at adolescence, to become a Cinderella, which some of my hon. Friends think it well might if the two Ministries are brought together.
One sound argument against the timing of the merger is that the Corporations still need guidance and assistance from a minister. The Minister himself referred to the excellent and able assistance which was given by Lord Pakenham, when he was the Minister. He certainly acted as the guide, philosopher, and friend of the two public Corporations. But, I think it might have been better if we had waited until these Corporations were no longer in need of subsidies before the merger took place, because as long as nationalised industries are receiving subsidies, as in the case of the civil aviation Corporations, then there is every justification for greater interference and a larger measure of control being exercised by the minister responsible.
As long as that situation exists in the case of the public Corporations, it would be better if there were a Minister in control. Incidentally, in passing, one should point out, for the benefit of the record, that the losses incurred by B.O.A.C. and B.E.A.C. in 1952 and 1953 were no way near the £9 million, to which the hon. and gallant Member for Macclesfield (Air Commodore Harvey) referred. I was a little shocked that one so closely associated with the civil aviation industry in the private sector should throw such


false figures around and create the wrong impression.
The actual losses made by these two Corporations up to 31st March, 1952, were no greater than £1,250,000. Although the accounts for the current year have not been published yet, it has been indicated by the Chairman, I believe, that the total losses of the two Corporations will come to nearly the same figure. Last year, B.O.A.C. incurred a loss, whereas the previous year it did not. It is true that over the period of years since the civil aviation Corporations were set up, there has been a substantial loss, but that was intentional and foreseen as being necessary if there was to be adequate development of publicly-owned civil aviation in this country.
We consider that the timing of this merger is inopportune, first, because of the number of problems which still confronts the civil aviation industry and the likely developments, many most favourable to this country, which are taking place and are likely to continue to do so, and, secondly, because of the policy changes which have been initiated by this Government in the field of both civil aviation and inland transport, which have increased the responsibilities of the Ministers concerned.
Our experience of having one Minister for the two Ministries, with two Parliamentary Secretaries, has not been altogether satisfactory, and it justifies the doubts whether this merger should be effected during this period, when there must be not only reorganisation of the inland transport industry and the carrying out of this new policy in civil aviation but, at the same time, the reorganisation of the two Departments, which must occupy a certain amount of attention of the Minister and his subordinates and must detract them, to some extent, from carrying out their normal, routine functions, their current business, and the carrying through of their new policy.
We do not want the Minister to become a bottleneck so that matters accumulate on his desk and decisions are held up. I do not want to suggest—because he is a Minister of the two Ministries at present—that the failure to make a large number of decisions is necessarily due to this factor, but there are many decisions which—as was pointed out by quotations from

HANSARD—we have been pressing the Minister to make and which he has failed to make. We are, therefore, entitled to believe that his failure to make them is due to his inability to find the time.

Mr. Lennox-Boyd: One of them involves the expenditure of £400 million. I think I may be forgiven for not having settled that overnight.

Mr. Davies: I was not referring to the matter of the electrification of the surburban line to Enfield. I shall deal with that question in the Adjournment debate on Tuesday, by which time I hope the Minister will have had time to make up his mind. The two Ministries will still not have been merged then, so he will have had some time to consider the matter.
It would be possible to go through the new Transport Act and point out many duties which fall upon the Minister and which he will have to carry out within the near future. They relate not merely to the disposal of road haulage, for which he has a very considerable responsibility under the Act. In addition, he has to manage and control the transport fund which is to be set up, to submit its accounts to Parliament, to receive the plan for the reorganisation of the railways and, after it has been submitted to him, consult with the representative bodies affected—such as the unions, the National Coal Board and the Commission itself—then produce a White Paper and have it debated in Parliament, and then produce his Statutory Instrument for further debate.
On road passenger transport he has to make up his mind whether to exercise the power he has to control and, if need be, reduce, the Commission's holdings in road passenger transport; he will have to receive the Thesiger Committee's Report and make up his mind what the Government's policy will be after he has received it, and he will have to submit regulations on the pension rates and compensation for employees—and we are still waiting for those regulations to be laid before us.
I refer to those matters to show how, at the very time when these two Ministries are being merged, the Minister has a far greater number of functions to perform because of the legislation which the


Government have introduced than would normally be the case, and for that reason the timing, in our view, is wrong.
There is a final reason why I entertain doubt about the wisdom of acting now. This change of policy will endanger the proper function of transport in this country. Civil aviation was succeeding remarkably and is setting the lead in civil aviation throughout the world, and if it is now absorbed into the Ministry of Transport, where the policy which is being pursued is in our view a backward looking policy which is destroying the co-ordinated and integration conception which we hold of transport, then civil aviation, in the process, is likely to suffer.
Transport needs to be given every encouragement for the development of new ideas and the exercise of initiative and enterprise because of the great importance of transport to the modern economy, and I fear that the absorption of civil aviation into the Ministry and the extra reorganisation involved might prevent that policy from being pursued.
We on this side of the House have advocated the co-ordination of transport but, in effect, this Government have decided to end it. It was strange to hear arguments from the other side that this step would make the co-ordination of transport easier and more satisfactory.

Mr. Maclay: Let us get this right. Coordination of policy is very different from the physical co-ordination of transport in the sense which hon. Members opposite mean.

Mr. Davies: The hon. Member for Hendon, North (Mr. C. I. Orr-Ewing) did not interpret co-ordination in that way. He was referring to co-ordination of transport, and that comes strangely from those benches. That is what I heard the hon. Member say, and I made a note at the time. If they are arguing on those lines, it would be logical to co-ordinate transport itself and to make the job of the Ministry easier.
In principle, we are not opposed to the merger of the two Ministries and we trust that, in the long run, such a merger will prove of benefit to British transport and industry, but it will certainly be handicapped in the task by the policies which are being pursued by the Govern-

ment. Because we do not oppose it in principle, we do not propose to divide the House on the Motion.

11.3 p.m.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. John Profumo): I do not think there is any reason for me unduly to delay the House any further. All hon. Members who have read the White Paper or who have listened to my right hon. Friend's speech tonight will by now be fully acquainted with the reasons why the Government propose to merge the Ministries of Civil Aviation and Transport. I will try to deal with some points which have been raised in the course of some extremely interesting speeches.
May I say, on behalf of this side of the House, how glad I was to see the hon. Member for Uxbridge (Mr. Beswick) on the Front Bench opposite tonight, although I must confess that it appeared to me, having listened carefully to his speech, that he was occupying a rearward facing seat. First of all, he spoke of representation in the Government being reduced. That was possibly a slip of the tongue, for I am sure all hon. Members realise that there is no reduction in the representation in the Government.
I did not understand the significance of his reference to the Corporations still being in the "red." I would be more inclined to agree with my noble Friend the Member for Inverness (Lord Malcolm Douglas-Hamilton), that in some circumstances there can be too much Government administration. I believe that the chairmen of the two Corporations would fully agree with me that they are quite capable of doing their own jobs. If anybody is to get the Corporations out of the "red," as we all wish to see, as speedily as possible, we can confidently leave that side of the organisation of civil aviation to the chairmen and the enterprising staffs engaged in the Corporation's work.
I must take the hon. Member to task on one or two points which he made. First, I understood him to say that there had been dissatisfaction within the unions at the policy, or at the way in which the Government were administering the policy, in civil aviation. I find absolutely no record of that whatever.

Mr. Mikardo: As a member of the trade union side of the National Joint Council, I think I can say without fear of contradiction that the trade union side has made it abundantly clear that they are grossly dissatisfied with the way in which they have been treated by the Minister. They were called into consultation, so-called, by the Minister before his policy was formulated. All that happened was that they were told flatly what was to be done in three days' time and that it was too late to make any changes. Since then they have had one firm promise from the Minister, which has been shamelessly dishonoured. That is no cause for satisfaction by the trade unions.

Mr. Profumo: Will the hon. Member go on to say what promise was broken?

Mr. Mikardo: The Minister undertook that in the new dispensation whereby licences were granted to independent operators, he would satisfy himself, before a licence was granted, that the pay and conditions of workers in the independent operator's employ were no less favourable than was laid down by the National Joint Council. Subsequently, the Minister has made arrangements under which he does not so satisfy himself; a licence is granted, and then he leaves it ex post facto for the unions to complain. That is, without doubt, an unequivocal dishonouring of a clear-cut promise.

Mr. Profumo: I thought that the hon. Member would probably go rather wide of what I was discussing. I cannot in any way accept his implication.

Mr. Mikardo: It is on the record.

Mr. Profumo: The hon. Member is, perhaps, too anxious to throw out those challenges across the Floor of the House. As he well knows, there is no dispute, and my right hon. Friend has honoured the undertaking which he gave when the policy was outlined by the Government.

Mr. Mikardo: Absolutely untrue.

Mr. Profumo: That must be a matter for argument and discussion on another occasion if the hon. Member is able to bring it to the Floor of the House. He knows perfectly well that there is no dispute at the moment between the independent operators and the unions concerned.
The hon. Member also said that the unions were dissatisfied with the way in which my right hon. Friend has been negotiating this merger.

Mr. Mikardo: I never said a word about it.

Mr. Profumo: If I misunderstood the hon. Member, I apologise. It appeared to me, however, that he was sure that the unions were dissatisfied because they had not been consulted about this merger.

Mr. Mikardo: No.

Mr. Profumo: If the hon. Member wishes to make the position clear, it is important to get it straight now.

Mr. Mikardo: I hesitate to accede to the hon. Gentleman's invitation to explain what I meant, because the last time I did it he rebuked me for doing so. I told the hon. Gentleman, at his own direction, a piece of information. He then accused me of hurling charges across the Floor. If he wants information, he had better be a bit less ungrateful in future. What I was referring to on the grounds of consultation was not with respect to the policy of merging the two Ministries, but with respect to the policy, initiated some time ago, of increasing the field for independent operators.

Mr. Profumo: When the hon. Member first stood up, I was referring to the hon. Member for Uxbridge, who is, I see, just about to stand up. The hon. Member quite clearly intimated that all the unions were opposed to this merger. That was the note I made at the time he said it.

Mr. Mikardo: I did not say it.

Mr. Profumo: I am now talking about the hon. Member for Uxbridge, who clearly indicated that it had been opposed by all the unions. I was merely saying that that is not the case.

Mr. Beswick: The hon. Gentleman is quite right. I did say that all the unions were opposed to the merger. I was not saying that they were opposed to the way it was being carried out or complaining about the lack of consultation.

Mr. Profumo: I am grateful to the hon. Gentleman, but I must add that we have no official intimation that all the unions are against the merger.
The hon. Gentleman went on to say there was disappointment because it was difficult for the Minister to find time to see deputations, and there were inferences throughout many of the speeches of hon. Members that my right hon. Friend was not able to give enough time to civil aviation matters, and that was causing some anxiety. The hon. Gentleman the Member for Enfield called him a bottleneck.

Mr. Ernest Davies: I said he might become one.

Mr. Profumo: I can only say: some bottle, some neck.
No one seriously concerned with civil aviation could seriously charge my right hon. Friend with having neglected his duties in any sphere of his responsibility, even during the strenuous period of the passage of the Transport Act. The very reverse is the fact. He has had regular meetings with the Chairmen of the airways Corporations, and there has been no delay whatever in dealing with administrative problems.
During the last four weeks in the field of civil aviation, he opened the Commonwealth Air Transport Council; was host at a reception for the delegates; has presided at a meeting of the National Civil Aviation Consultative Council; has opened and paid three visits to the International Civil Aviation Organisation Assembly at Brighton; has met a delegation from the Aerodrome Owners' Association; has held discussions with the British Independent Air Transport Association; has flown to the Isle of Man for the opening of the terminal building at Ronaldsway; and has opened the Municipal Airport at Ramsgate.

Mr. Mikardo: He must have drunk a great deal of sherry.

Mr. Lennox-Boyd: No bottleneck there.

Mr. Profumo: Tomorrow my right hon. Friend will be visiting the Channel Islands, to attend the Jersey Air Day, to meet members of the Channel Island Air Advisory Council, and make a tour of inspection.

Group Captain Wilcock: Surely these facts prove that we require a separate Minister for Civil Aviation.

Mr. Profumo: I think hon. Gentlemen will appreciate that those engagements require a great deal of preparation and forethought, and that by bringing the two Departments under one roof it will be easier for my right hon. Friend to devote even more of his time to civil aviation matters. I cannot accept the implication that the facts I have given are factors which could be taken into consideration for having another Minister. Even at the height of his preoccupations with the Transport Act my right hon. Friend has been able to devote a great deal of his time to civil aviation administration.

Mr. Ernest Davies: The hon. Gentleman rather missed our point. It was that there were very important decisions which have not been taken. The hon. Gentleman has not explained why decisions such as the appointments to the Transport Commission and the Executive to replace those members whose terms of office expire in August have not been taken. A number of other decisions have also been referred to in this debate.

Mr. Profumo: That is an objection which is hardly worthy of any answer at all. I hope the hon. Member will allow me to develop my argument. I listened most carefully to what he had to say.
I will now move to one other argument which the hon. Member for Uxbridge made and which I think was the point the hon. Member for Enfield, East (Mr. Ernest Davies) was trying to make. The hon. Member for Uxbridge said that no decision had been made about things like fog dispersal and Gatwick. I entirely agree that these are serious problems. I did not notice any greater inclination by the Opposition, when they were in power, to arrive at decisions on these problems. They are problems, decisions on which cannot be reached in a hurry. Even though we may have to come to the House and say that we have nothing to report, it does not mean that we are not giving these matters considerable thought. I remember when hon. Members opposite sat on this side of the House how my hon. Friends used to chuckle on many occasions when the hon. Member for Uxbridge said that these matters were under active consideration. If he had said that they were being considered passively it would strengthen my argument still more.
We all listened with great interest to the speech of the hon. and gallant Member for Derby, North (Group Captain Wilcock), for whom we have the greatest respect. In reply to him and to other hon. Members, I should like to say that there is no intention whatsoever of lowering the status of civil aviation, which, I think, was an expression which was used. In fact, it has been found over the period in which one Minister has been responsible for the two Ministries that it has been possible for those two Ministries to act with greater efficiency and with some gain in general convenience.
I agree with my hon. Friend the Member for Hendon, North (Mr. C. I. Orr-Ewing) that we are not going to cut down large numbers of people. That is not the fundamental intention at all. What we are trying to do is to carry out an operation which will in the end mean a more efficient administration. In fact, this is a merging operation, not a submerging one. There is no ground whatsoever for thinking that the development of civil aviation will suffer from the amalgamation. The experts in the various fields which are covered at present by those working in the Ministry of Civil Aviation will be covered by the same people when we start working in the amalgamated Ministry. The Departmental organisation for civil aviation will remain largely as at present. Let there be no doubt that when the Ministries combine under one roof civil aviation will proceed as usual.

Group Captain Wilcock: I should like to thank the Minister for that explanation and also for his assurance that there is no question of economy. The Minister also said that there was no question of economy, and it can only be that this merger expects to get from the Ministry of Transport something which it has not got from the present set-up.

Mr. Profumo: I think my right hon. Friend said there would be a limited economy. On the other hand, I must make this point. I have always found from experience that if economy is started it has a cumulative effect. More economies can be made later, but the point I am trying to make is that this is not being carried out primarily to effect a penny-wise economy. We are going to make a

limited economy, but, as I have said, there are other reasons why we are doing this.
I was interested in the speech of my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey), and I join with him in his tribute to the Air Registration Board. The problem which he raised will be examined, though I do not think at this stage that perhaps very much can be done in that direction. My hon. Friend the Member for Hendon, North asked about the future of Ariel House. This is a matter for my right hon. Friend the Minister of Works, but I can tell my hon. Friend that no decision has yet been reached. I think it is probable it will be handed over to the Air Ministry.
The hon. Member for Lincoln (Mr. de Freitas), who has been courteous enough to inform me that he had to leave, talked of the stranglehold of the air marshals—as he put it—in regard to development of aero engines. I do not think he need have any fear that my right hon. Friend, in charge of both the Departments, will be in any worse position to stand up for the requirements of civil aviation as time goes on. I assure the hon. Member that in the present Government there is the closest co-ordination in planning between the Service Departments, the Ministry of Supply and the Ministry of Transport and Civil Aviation.
I wish to say a word about the most thoughtful and balanced observations of the hon. Member for Reading, South (Mr. Mikardo) who, in an interesting speech, did not in any way get "burned up". I shall read his speech with great care tomorrow. I want to mention one matter in which inadvertently, I am sure, he got out of balance. He talked of the international respect for the Air Registration Board and wished that it might be more internationally regarded, particularly on the other side of the Atlantic. He inferred that the American C.A.A. had failed to recognise a Certificate of Airworthiness which was passed by the Air Registration Board.
It is only a technical point, but I should put it right. Certificates of airworthiness are issued by the Minister on the recommendation of the A.R.B. but it is not true that the C.A.A. have refused to recognise a Certificate of Airworthiness for the Comet. No Certificate of Airworthiness has so far been issued for the Comet III, because this aircraft does


not exist. We are in process of negotiations with our friends on the other side of the Atlantic, but the problem is of great significance for this country and it would do the greatest harm if we in this House were to get out of balance and criticise our friends for something which they have not done.
There has never been any question of a Certificate of Airworthiness for the Comet I being recognised by C.A.A.; no American operator has tried to buy one. But technicians here and in the United States are trying to unravel the very real difficulties in the recognition of an entirely new type of engine. I hope the hon. Member will forgive me making that point, because I know that he did not want in any way to make remarks which at this moment in delicate negotiations may be out of balance.

Mr. Mikardo: Mr. Mikardorose—

Mr. Profumo: Perhaps the hon. Member will allow me to continue, as I do not want to detain the House very much longer.
A great deal was said about the type of merger that we are proposing. Largely, the Opposition did not object to the action of the Government, but their objection to it is that we should seek to do it now. The hon. Member for Enfield, East (Mr. Ernest Davies) and the hon. Member for Lincoln, as well as the hon. Member for Reading, South, made the point about timing. We never find the right time to take a step, whether we are designing an aeroplane or deciding on the redevelopment of a Government Department. Particularly in the field of civil aviation it will be difficult to know what is the right time because there are many intractable problems. My right hon. Friend and I know very well indeed that it is not a question of saying "Here is a calm period and the teething troubles are over," because there are always new problems arising.
The hon. Member for Reading, South, mentioned the problems of noise and fatigue and there are all the other problems which the jet age has brought. What we do feel is that the nursery pains of civil aviation are past and that it is blossoming into manhood. This is the time when, for the very sake of civil

aviation, we should bring together the Departments where all forms of transport can be co-ordinated under one Minister.
In passing, the hon. Member for Reading, South, spoke about independent operators and said he did not think that this was a closed chapter. I hasten to assure him that we do not so regard it. We regard it as a newly opened book. The fundamental reason for the action which we propose tonight is really found in paragraph 3 of the White Paper. That is, the simplification of the machinery of government; the acceleration of the machinery of government, because in civil aviation—and I know that we are all agreed on this—speed of action so often counts. If one has one Minister in charge of transport problems, one ensures that the co-ordination of transport, which, after all, is the function of the Minister of Transport, and the advancement of all forms of transport, which will be his re-ponsibility, will be better carried out in the public interest.
Several hon. Members have spoken of the difficulties which arise in the field of transport such as when shipping may come up against civil aviation, and when rail transport may be at variance with it; we think that if we are to see civil aviation get a fair deal, and not be constrained in a strait-jacket, that will be brought about in a far better way with one Minister able to co-ordinate transport as a whole and who will be able to speak with one voice in the Cabinet.
I realise that it is seldom possible to get complete unanimity of opinion in the House, and difficult to find it among hon. Members opposite. But on this question of timing, on which stress has been laid tonight, hon. Members on the other side might like to be reminded of something said in this House on 30th July last year by a right hon. Member who is revered and much respected by a large number of hon. Gentlemen opposite—the right hon. Member for Ebbw Vale (Mr. Bevan). He then said:
I will make some further suggestions. The difficulty is that we are looking at the Governmental machine only from the point of view of dismissing a few civil servants. That is too short-sighted. We ought to see whether the Governmental machine today has been adjusted to the changes that have taken place in Governmental functions.


To continue with what he said about timing, I go on to the next few sentences of his speech:
Obviously, very many important changes have taken place. Industries have been nationalised and transferred, as to their detailed day-to-day administration, to boards. I therefore suggest it is no use merely having the same Minister for Civil Aviation and Transport. There has been no amalgamation of the Departments. The Departments are still there. They still have separate addresses. They still have the same permanent secretaries. There is no amalgamation. It is merely a change of nomenclature.
Then he said:
It is not an organic change in the structure of the Departments. I suggest, therefore, that these two Departments be immediately organically amalgamated."—[OFFICIAL REPORT, 30th July, 1952; Vol. 504, c. 1531.]
It may be that the right hon. Gentleman would criticise Her Majesty's Government for the delay in carrying out his suggestion; it may be that he would think we did not do it speedily enough, but I do commend his view with the greatest confidence, and ask the House to approve this Motion.

Resolved,
That an humble Address be presented to Her Majesty, praying that the Transfer of Functions (Ministry of Civil Aviation) Order, 1953, be made in the form of the Draft laid before this House on 23rd June.

To be presented by Privy Councillors or Members of Her Majesty's Household.

Orders of the Day — BUS SERVICE, THE HARTLEPOOLS

11.30 p.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite): I beg to move,
That the Hartlepool Corporation Act, 1925, Modification Order, 1953, dated 27th May, 1953, a copy of which was laid before this House on 9th June, be approved.
Hon. Members will wish to know that this Order, which was made under Section 91 of the Road Traffic Act, 1930, removes the prohibition contained in Section 5 of the Hartlepool Corporation Act, 1925, on the running of omnibuses by that Corporation on a part of Cleveland Road in Hartlepool.
The purpose of the prohibition had been to protect the trolley vehicle service along this road between Hartlepool and

West Hartlepool against competition from motor omnibuses. The trolley vehicle service is now no longer in existence, and has been replaced by motor omnibuses. The removal of the prohibition will enable Hartlepool Corporation to share in this omnibus service with their neighbours in West Hartlepool. I hope that after this brief explanation hon. Members will agree to this useful step.

11.31 p.m.

Mr. David Jones: I merely wish to say that there is no objection to this Order. My only regret is that it has been necessary to go to the Ministry to get the alteration made. If there is to be an argument or a row between these two local authorities, it is just as well that they should both be in a position to have it out properly.

Orders of the Day — MEAT RATIONING

11.33 p.m.

Mr. Frederick Willey: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Meat (Rationing) (Amendment No. 3) Order, 1953 (S.I., 1953, No. 1024), dated 30th June, 1953, a copy of which was laid before this House on 30th June, be annulled.
This is an amending Order which came into operation on 5th July. As the Explanatory Note says, it frees from rationing any surplus meat held by retailers out of their allocations after having satisfied the lawful requirements of their registered customers and establishments and certain manufacturers whom they are authorised to supply.
This Order follows the Rationing (Amendment No. 2) Order which increased the ration from 2s. to 2s. 4d. as from 14th June, 1953, and is part of a wide operation by the Ministry of Food. They suspended the surcharge on the butchers; in other words, they increased the profit margin of the butchers by 2d. in every £. They withdrew the fat allowances, they adjusted the wholesale pork prices, they said that allocations should include 5 per cent. of imported mutton, and that if the butchers refused to take any particular part of the meat allocated to them then the Ministry of Food would withhold supplies.
In short, this Order is part of a fairly large-scale operation by the Ministry of Food, and it, together with the other steps I have mentioned, have led to a vigorous controversy. I am sure that the Parliamentary Secretary—I am glad to see that the Minister is joining us again tonight—will be anxious to make a statement about the situation which has arisen. Indeed, it has caused a very lively controversy in the Press. The "Sunday Express," for instance, said last Sunday:
Major Lloyd George is behaving in a manner which brings the Tories everywhere into ridicule. The Government must remove Major Lloyd George to another post before the women voters have a chance to remove its majority. He would make an excellent Lord Privy Seal.
Remembering the circumstances in which the Lord Privy Seal received that office, when the responsibility of the Ministry of Health was removed from him after he had bungled the business of charges, I cannot quarrel with the suggestion made by the "Sunday Express." If the advice were followed I do not think that the House would be any the worse off.
In particular, the butchers complain about the action taken as mailed fist tactics by the Ministry of Food. The obligation of the butchers is to carry out the directions of the Ministry of Food and, whatever their personal views may be, to behave in a responsible manner. I would not for a moment suggest that they are entitled to take the action that they have taken in some parts of the country and have threatened to take in others. I have had experience of meeting the butchers through their representative organisations and I have found them responsible people. I can only think that they must have been treated in a flat-footed sort of way.
By and large, the butchers are rather sympathetic to the Government. Why should they seek to embarrass the Government? They must have some real complaint. Will the Parliamentary Secretary tell us why the butchers are making this complaint, why they had not been properly consulted about this Order and why the Ministry have made a hash of it. However, I agree with the Minister that so long as rationing remains it is the butchers' responsibility to distribute the supplies fairly, and that whatever their complaint and however justified

they may feel in having a complaint against the Minister they ought not to resort to this method of bringing it home to the people.
In their statement about this Order, the Ministry said that this arrangement was being made to meet the special and temporary conditions in the limited period when heavy supplies are available. I want to deal with the circumstances in which the Ministry think it right to resort to the action that is allowed under the Order. We cannot say that there is an abundance of meat or that there has been for any time. I know there is a story that we have never had so much meat as we have had this year—[HON. MEMBERS: "Hear, hear."]—but that, as Lord Woolton would say, is untrue.
As apparently, some hon. Members seem to be misinformed I will give the figures briefly. These are the supplies of meat this year compared with those for 1950, which was a good post-war year, although far from providing adequate meat supplies: January, 1950, 35,700 tons; January, 1953, 30,200 tons; February, 1950, 36,900 tons; February, 1953, 31,700 tons; March, 1950, 36,600 tons; March, 1953, 31,200 tons; April, 1950, 35,600 tons; April, 1953, 30,400 tons; May, 1950, 36,700 tons; May, 1953, 34,300 tons. These are the latest figures. This is not a question of abundant meat supplies embarrassing the Ministry, but of there being exceptional supplies of unreasonable and unsatisfactory meat.
That is the problem. That is why the Minister is now known as the "Minister of Fat and Gristle." It is alleged that we are getting exceptional amount of fat pork from Eire. If the Parliamentary Secretary can tell us, I should like to know what he is doing about the price schedules to tackle this problem. There is Australian ewe mutton. We have a glut of stuff, too tough to eat and too old to be profitable to keep the sheep for wool. This is the position about Australian mutton.
We have imported this year, so far, 100 times as much Australian mutton as we did last year. I do not want to mislead hon. Members opposite, but this is 100 times more than last year because we imported practically no Australian mutton then. We imported practically


no Australian mutton the year before. In fact, we imported last year, only one-fifth of the lamb from Australia than we are importing this year. From these facts, what is obvious? That we are getting ancient Australian ewe mutton. I have said this time after time in the House and it has been denied by the Minister. But, from these figures, is it not obvious that we are getting an exceptional amount of Australian mutton and that Australian mutton is exceptionally ancient?
It is necessary to establish this point because it has been disputed by the Minister and it is partly the cause of the trouble between him and the butchers, who have some experts on meat. I do not want to quote Conservative newspapers. I have looked through them and they could have provided many quotations, but I turn to the Liberal Press. The "News Chronicle," on Monday, said:
Even the Zoo says 'No' to ewe mutton.
The "Manchester Guardian," which is a very sober paper, has carried out scientific inquiries into the quality of ewe mutton. This is what they reported, on Monday:
We tried roasting it, and the fat was so yellow when it emerged from the oven that we thought for a moment we'd been given horsemeat by mistake. But no horse could be as tough as this. The texture was stringy and the total effect was as if we had tried roasting a cricket boot. We cut inches of fat off the outside to start with but still the whole joint was shot through with layers of it. Total cost eight and six—and only enough for one meal for three people.
I know it is said by the experts who advise the Ministry of Food that this is not the way one ought to treat ewe mutton.
The "Manchester Guardian," pursuing its inquiries today, takes it along other lines. It widens the scope of the inquiries and states:
'Like any old leather it was, and even after two hours of steam roasting the cat wouldn't eat it,' said the cook. 'Since I've been in the trade I've never seen such shocking stuff,' said the wholesale buyer. 'People just aren't buying it,' said the butcher.
Following their earlier experiments, they tried another experiment and report:
By way of experiment a large quantity of this ewe meat was bought, put into a

large pot, and boiled for a couple of hours. A thick layer of grease settled on the surface, for none had been removed from the joint, but beneath this the meat, admittedly a lot smaller, did not look at all bad. On removing it from the pot not only did a knife cut through it but, even though there was a total absence of taste, it was edible and nothing like so bad as butchers, books and meat buyers had led one to believe.
I am told that this morning, the B.B.C, helpful as usual, said that one can make a palatable dish if one obtained ewe mutton and cooked it in wine, red or white. At any rate, I have the Parliamentary Secretary with me now—he probably has not tasted ewe mutton—but he must agree that he is misinformed, while the butchers and consumers are right that this is a poor quality Australian ewe mutton.
I want to go a little further in tracing its source because I want to know what the Ministry did about it. We cannot blame bulk purchase for this. This Government endorsed an agreement committing us for 15 years. They endorsed it, and the Parliamentary Secretary cannot get out of it by saying that this is bulk purchase. He cannot say that this would be changed if we could resort to private buying, because this agreement commits us for 15 years, and if we resort to private buying we are still bound to take all the Australian exportable surplus. Minimum prices are fixed under the agreement.
I want to know the circumstances surrounding the question of this mutton. This agreement provides that the prices for Australian mutton will be calculated to encourage the production of first-quality mutton, with an appropriate differential for lower grades. As for the lower grades, it says that regard must be had to the differentials which would obtain on a free market. The Minister knew well enough when he was negotiating this year that if he were taking the exportable surplus he was taking ancient ewe mutton. We should like to know what he paid for it. What business acumen has he shown? Or are the Australians thinking that they have done very well at the Ministry's expense?
I have described what must be commonly accepted to be the condition of this meat, which we could have known, by using a little common intelligence, at the time we were discussing the prices.


On the prices we have agreed for this year, we have agreed to a 12½ per cent. increase for mutton from New Zealand—I am not complaining about that—and a 16·6 per cent. increase in the price of mutton from Australia. Why did we do that? I want to know these facts so that we know what course the Ministry ought to take about the sale of this ewe mutton to our consumers.
But this does not go to the root of the problem, because on this Australian ewe mutton the Ministry of Food are making about 200 per cent. profit. That is according to the figures given by the Australians of the price at which they are selling it. They complain that the Ministry are selling it to the domestic consumer at a price which on the face of it—according to their calculations— gives the Ministry this wide margin of profit. I am only asking for a little reasonableness and business acumen.
Surely, if that is the case, the only thing for the Ministry to do is to have a look at the price. What would any butcher do? He would, of course, look at the price. What I ask the Minister to do is this: to realise that this Order cannot solve his problems. The only way in which he can solve the problem is, as I have said time after time in the House, to alter the price and to realise that this meat must be sold cheaper.
I do not want to exaggerate the matter and I do not think the butchers do themselves any good by exaggerating it, and that is why I relied on the factual inquiry of the "Manchester Guardian," which is a sober newspaper. But we must realise that everyone knows that this is poor quality mutton. If the Minister is to sell it without difficulty, he must reduce the price.
I appreciate the Minister's dilemma well enough. I do not blame him. I blame the Treasury, and they should be represented here tonight. It is no good reducing the price of mutton and putting up the price of beef. If he does that he will increase the differential and make it more difficult for ordinary people to buy decent meat. What we must do is to say that these are exceptional circumstances; the Ministry have made an awful bloomer; they should not have bought this meat at this price; they should have got it at a knock-down price, and that, under the circumstances the subsidy will

have to be allowed to run up a little to cover the price decrease on the mutton.
The Ministry have caused this reaction this week because they have tackled this matter in the wrong way. The only way to tackle it—and I hope we shall get agreement on this—is by reducing the price of this mutton, and doing so without affecting other prices. We should allow the subsidy to run up to cover the mistakes of the Ministry, and the subsidy will have to bear the loss.
This Order, obviously, cannot meet the difficulty. I think the Parliamentary Secretary will agree that he failed absolutely to answer the point raised by my hon. Friend the Member for Cannock (Miss Lee). The butcher gets 7 per cent. of free meat, but when will he decide that he has a surplus on the ration? If he is fair, he will do so only at the end of the week. Is there, then, late on Saturdays, to be a sale of the meat left over? That has not happened this week. Anybody can go to the butcher on Monday—if he is not a wage earner; wage earners are penalised—and get all the meat he wants, because the butcher is allowed a surplus, and from a business point of view he cannot wait until he knows what are the demands of his registered customers.

Mr. Kenneth Thompson: In what way are the wage earners penalised?

Mr. Willey: Apparently the hon. Gentleman does not know that wage earners buy their meat at the end of the week, after they have received their wages.

Mr. Ralph Assheton: I can tell the hon. Member that in Blackburn, at any rate, people are not so "close" as that.

Mr. Willey: I am sorry that the right hon. Gentleman is so out of touch with the people of Blackburn.
I do not want to be led into speaking too long. I only wish to say that it is quite clear—and I think the whole House is with me—[Laughter]. Yes, because it is quite clear that the Minister has made a mistake. He should not now try to remedy that mistake by making the situation worse by increasing the differential between ewe mutton and beef. He ought to sell this ewe mutton at a businesslike,


commercial price, and the Chancellor of the Exchequer ought to say that the subsidy should be allowed to increase to cover that deficiency.

11.54 p.m.

Mr. Charles Royle: I beg to second the Motion.
At this time of night I have some inhibition about keeping the House sitting. I shall try to be as brief as I can and not repeat the excellent arguments which my hon. Friend the Member for Sunderland, North (Mr. Willey) has put forward. I hope it can be assumed that the Minister is glad to have this opportunity to make a statement about the difficulties of the meat situation at the present time.
The purpose of the Order against which we are praying tonight is admirable, in a general sense. It is to permit the retailers to do what they have not been able to do since 1940—to sell meat off the ration. [HON. MEMBERS: "Hear, hear,"] Hon. Members opposite might wait a moment. That is a very fine aim, and every hon. Member on this side would welcome it, under certain circumstances. We are all very anxious for this to be done—when we reach the point where the supply of the right type of commodity meets the demand. Then it will be a good thing, but not until then. That state of affairs has not yet come about.
The Minister himself has told us from time to time, and as recently as 24th June this year, that before supply meets demand we need a further 400,000 tons of meat a year to meet the country's requirements. The partial derationing Order which has now come into being does not meet the situation. The partial derationing is now ordered not because we have enough meat of the right kind to give everybody all that they want, but to cover up the criticisms which the Minister is receiving from the trade and from the consumer. The result is that a system has now been evolved by the Minister which is neither fair shares for all nor free enterprise.
The butcher is expected to give the consumer a free choice, whilst the Minister is telling the butcher that he has to take what is given to him or do without his allocation of meat altogether. This savours of dictatorship. I should not have thought it was the kind of thing

to come from a Government Department in an Order to responsible members of the trade. It is not only dictatorship to the trade but is dictatorship to the consumer as to what the Ministry think he should eat.
The ration is at present 2s. 4d. and an extra 2d. worth of meat is given to the butcher. In my view, that is a complete acknowledgement that the meat which the Ministry are giving the butcher to meet his allocation is not sufficient, largely because of the quality and the wasteful meat which is being given to him. I assert that the 2s. 4d. ration is only being maintained by the use of poor quality meat. Without that type of meat, of whatever grade it may be, this ration would certainly not be met and it would be a very low ration indeed for this time of year.
What are the items about which the trade and the public are complaining? I hope that I am voicing the opinions of both of them from this side of the House. As my hon. Friend has said, we are getting this New Zealand and Australian ewe mutton, ewe mutton which has reached the great-grandmother stage.

Mr. Robert Crouch: Can the hon. Member say what proportion of the ewe mutton we are getting from Australia and New Zealand?

Mr. Royle: The present figure is stated to be about 5 per cent.
It is not only the New Zealand and Australian ewe mutton that is being complained about. The trade and the public are also complaining about very poor Argentine lamb, which really ought to be called mutton. They are also complaining about the excessively fat pork, which ought to be in the bacon factories and not in the butchers' shops. If we add those items together we are not considering 5 per cent. of the total allocation but something like 25 per cent., to use the right hon. and gallant Gentleman's own figure.

The Minister of Food (Major Lloyd George): No.

Mr. Royle: I am sure that a week or two ago the Minister said that the accumulation of the meat which was being complained of was not more than 25 per cent. of the total ration.

Major Lloyd George: I said 5 per cent.

Mr. Royle: I challenge that. The Minister himself tonight has agreed that as far as ewe mutton is concerned it represents something like 5 per cent. of the total allocation.

Major Lloyd George: The total of imported mutton is 5 per cent. It is not all ewe mutton. It is ewe mutton and wether.

Mr. Royle: Within the items I have mentioned I am not far short in suggestion that 25 per cent. is taken up with types of meat which are completely unsuitable. I know something about selling meat over the counter. I know what the public has to face, and I do not take back a single word.
The Minister says that there was as large a percentage of frozen mutton sold in 1950, as there is now. That is true, but it was a very different kind of mutton then.

Mr. Arthur Lewis: Good Socialist lamb.

Mr. Royle: I agree. When it is a question of bulk purchase we believe in it We know what we are doing. We buy the right types.
We all remember how, after the outbreak of the war in Korea, stockpiling of raw materials led to high prices. That applied to wool, with the result that Australian and New Zealand producers found it more profitable to keep the animals for the extra wool. That explains why, last year, the amount of ewe mutton from Australia and New Zealand was very small, and the result is that we are now getting these very old sheep. It is fair to level the criticism at the Ministry of Food that we are getting that type of mutton and that the Australians and New Zealanders have, to some extent, "pulled a fast one." There was ewe mutton on the market before and during the war, and during the whole of the control period, but it was always sold very differently, and more cheaply, and it mainly went for manufacture.
My hon. Friend mentioned what the producers in New Zealand were saying. I have in my hand a quotation from a speech made by Mr. Sydney Reeves, chairman of the Meat and Wholesale

Section of the Federated Farmers in Wellington, New Zealand. He said that the United Kingdom Government had bought New Zealand ewe mutton at 5½d. per lb. The price the butchers of England are charged by the Ministry of Food is 1s. 2¾d. The consumer pays a little more than that for it, so that we can assume that the policy of the Tory Government is not only to take the subsidy from the consumers, but exploit them as well. I assert that nothing so bad as this type of mutton ever reached the tables of our people before the war or in the post-war years.
Argentine lamb is not nearly as bad as the ewe mutton, but it is arriving in the shops in a shocking condition. The Government took nine months to sign the Argentine Agreement. Where are those with the "know how," of whom we heard so much? Where is this rich red Plate beef about which so much was said at the 1950 Election? The Government have failed to send to the Argentine the men they talked about to carry out the negotiations, and they have proved themselves to be very bad buyers. Their deliveries at this time are falling short.
On the subject of wasteful pork, I suggest that no butcher in the country is able to make it meet the ration. These fat pigs should have been sent to the bacon factories—

Sir Herbert Williams: What, mutton?

Mr. Royle: Some of us know where we would like to send the hon. Gentleman. I am trying to make a serious speech, which is, I think, of importance to the Ministry.
These fat pigs should have been sent to the bacon factories, and had that been done it would probably have been possible to clear bacon from the ration some time ago, and it would also have enabled bacon to be sold more cheaply because there would have been plenty of it. It would have been more honest to give a lower meat ration in qualities which are suitable rather than pretend to carry out a ridiculous promise which was made at the time of the Election.
I challenge the Minister to deny what I am saying now. So blatant were the promises of his party at the time of the Election that they were determined to


show a faked increase at any cost, and what a cost. The lower paid workers cannot afford their ration and other people cannot eat it. The present 2s. 4d. is the equivalent of 1s. 11½d. in 1951, so that there is no improvement in quantity, and even that meat is useless for ordinary consumption. Hence this Order, which permits the sale of meat off the ration if a surplus exists.
Will the Minister tell us what is to happen under this arrangement? Has the butcher to sell his good meat from Tuesday to Friday and hold a mock auction on Saturday for the remainder, or has he to sell the good, bad and indifferent meat all the week, and, having served his registered customers with poor meat, sell his surplus good meat to people who can afford to buy it? My hon. Friend was perfectly right when he said that, in the main, the lower paid workers get their wages late in the week, and are the ones who will be at a disadvantage.
The organised meat trade is probably one of the most Tory-minded groups of people in the country. They have on the benches opposite four hon. Members who are honorary vice-presidents of the National Federation of Meat Traders. I am glad to see two present tonight; one is making a big noise from below the Gangway. He has held that position for many years and I am looking forward tonight to hearing what he has to say about the position and what one of his hon. Friends who is similarly placed has to say. I am not looking at the hon. Member for Kidderminster (Mr. Nabarro); the hon. Member to whom I refer knows and I hope he will take part tonight. One hon. Member who holds this exalted position brought into the House, and displayed, in 1951, a horrible example of frozen mutton. In butchers' terms that meat was angel's food compared with the meat which is being sold now.
I suppose that the hon. Members I have referred to have divided loyalties on this matter at the moment. The trade really believed they were in for a fine time when the Tory Government was elected. On the appearance of the Parliamentary Secretary to the Ministry of Food at their conference they sang:
For he's a jolly good fellow.
But I know that group of people. They have another song which they sing only

at social functions and it ends with the words:
… why was he born at all?
That is the song the meat trade are singing about the right hon. and gallant Gentleman and the Parliamentary Secretary at this time. They are battered, they are bruised and they are bewildered. They are having to carry out a hybrid mongrel scheme that has been devised for them by the Minister—

Mr. L. M. Lever: Mongrel meat.

Mr. Royle: While they and the Minister fight the poor consumer takes the count as the referee when two boxers go berserk. They are having poor meat at high prices and the consumer is suffering all the time. Tory Ministry meat breaks teeth at a time when the Tories have imposed a charge on dentures. The general public dare not gnash their teeth in wrath about the meat situation because they cannot afford new teeth.
The avowed intention of the Minister and the Parliamentary Secretary is to kill their Ministry. If the aroma they are leaving in the nostrils of the consumer and the butcher is anything to go by, the Ministry are already in a very bad state. I am glad that my hon. Friends have an opportunity to express themselves on this matter and that the Minister has been given full opportunity of making a statement on what is a very serious situation.

12.15 a.m.

The Parliamentary Secretary to the Ministry of Food (Dr. Charles Hill): I think it will be for the convenience of the House if I accept the suggestion that I should make a statement on the position in view of the many things which have been said over the past ten days. The hon. Member for Sunderland, North (Mr. Willey) was unusually objective in much of what he said, and I am grateful to him. But, naturally, towards the end of his speech, he slipped into his customary mis-use of statistics; I cannot imagine what happens to the hon. Gentleman when he sees statistics. In this case, he quoted figures for 1950, but he did not tell the House that that was the year when the Socialist Government dipped deep into stocks, with the result that early in 1951 the meat ration sank to the


lowest level ever. On the question of bulk purchase, the hon. Gentleman said that the present Government signed the agreement with Australia; whereas, on reflection, he will recall that it was signed on behalf of his own Government by his right hon. Friend the Member for Brad ford, Central (Mr. Webb).
But I think it will serve the purpose of the House if I speak on the four main points raised—and I hope that hon. Members opposite will not accuse me of discourtesy if I make my statement in relation to the representations of the butchers themselves—by the butchers when they met my right hon. and gallant Friend the Minister last Friday.
The first point was that the Ministry should withdraw its arbitrary instructions, as the butchers termed them. The hon. Member for Sunderland, North advised the butchers to support the Ministry, and in that he differed from his hon. Friend the Member for Salford, West (Mr. Royle); although I imagine that it was then the voice of the butcher speaking, and not the voice of the hon. Member for Salford, West. The butchers claimed that they should have the right of refusal in respect of imported mutton. But, under a system of bulk purchase, and guaranteed prices to agriculture, the Minister is required to accept all home-killed meat, the exportable surplus of the southern Dominions, and that which arrives under agreement from South America.
This meat must come to him, and must be distributed by him. It comes in varying qualities and kinds, but under a system of bulk purchase, and control, and rationing, my right hon. and gallant Friend has no alternative whatever but to distribute what meat he receives, and distribute it as fairly as he can. I am making no party point whatever about this. It is his responsibility, placed on him, to see that the varying kinds and qualities are distributed in the same proportions to all the butchers of the country.
Of course this involves an interference with local preferences, and even with individual preferences, but it is the inevitable consequence of that system, whatever the merits or demerits of it may be. While this system lasts, there is no escape for a Minister—on whichever side of the

House he may sit—who wishes to administer the scheme fairly. There is no escape from a distributive arrangement which requires each butcher to take the proportions of meat which are nationally applied, determined by the current supply.
This has obtained from the beginning of meat rationing, with one exception. Last November, it was possible, because of the conditions then existing, to relax this requirement for imported mutton only, allowing the butcher the option of taking imported mutton. It was thought at the time—and it proved right—that that optional system would take up the amount of imported mutton available. But, as the ration rose, so it became necessary to return to the common system which has obtained throughout, save for this one exception. Had we not returned to it, and had we continued the optional system, it would have meant that those butchers who were exercising their option to take the imported mutton would be required to take a disproportionately large amount.
Therefore, as from 5th July, we returned to the system which has obtained since the beginning, and that is what is described as an "ultimatum." I want to make it perfectly clear that when the relaxation—if I may so call it—was introduced in November last, it was plainly stated that it was for a time. Now that that relaxation has, in common fairness, had to go we hear such strong language as "ultimatum."

Mr. Willey: I never used the word.

Dr. Hill: The hon. Gentleman for Salford, West used some other term to the same effect. We have heard it throughout the country during the past week and we have been told, for example, that the language employed was the language of an ultimatum. The language was plain English used by the Ministry, not to the butchers, but to its own officials operating the scheme; out of courtesy the butchers were sent a copy. But it was not language used to them.
The secretary of the butchers' Federation said that they had never seen an instruction like it. They have operated under such an instruction for 14 years, but now they say that they have never seen an instruction like it.

Mr. Jack Jones: Or meat like it, either.

Dr. Hill: If the hon. Gentleman will wait a moment, I will come to his favourite subject.
The first point I want to make to the House—and I am grateful to the hon. Member who understands the obligations of the Minister under such a system—is that this is inevitably part of bulk purchase, control and rationing, and, secondly, that in this particular instance there has been no ultimatum, no new instructions and no bullying of the butchers, but that, in common fairness to butchers generally, there has been an end to a concession.
We are back to the common requirement that butchers all over the country shall take up, whether they like it or not, their fair proportions of the meat that is available. This is the result of the system of bulk purchase. While bulk purchase remains, it is clear from what we have heard over the past 10 days that it involves a serious limitation in both butcher and consumer choice. The only way out of such a difficulty is to end the system of bulk purchase. We are seeking to end this embarrassment as soon as we can by ending the whole system of bulk purchase, rationing and control.
Before developing that point further, I want to put a practical point. What would be the result of permitting butchers to decline the 5 per cent. of the total allocation which is mutton? The result would be that that mutton would go back into store and would come out again as a substantially higher proportion of a reduced meat ration at the end of the year.
We believe that it is not unreasonable that 5 per cent., rather more than 1d. of the ration of 2s. 4d., or, to take the ewe mutton figures, 3½ per cent. of the total, or 1d. of the 2s. 4d. ration, should be distributed now. We believe it wiser to do that now rather than leave it to accumulate to the end of the year. Pork cannot be stored for a long time so if it were not consumed now it would be wasted. It was the butchers who asked for more pork. The present percentage of pork in the total allocation is 7 per cent.

Mr. Royle: If the pork were cured into bacon, could it not be kept longer?

Dr. Hill: We had better avoid a technical discussion on the conversion of pork into bacon. The hon. Gentleman knows as well as I do that we have followed a bacon policy, and that we have in this country at present an adequate supply of bacon which has enabled us to distribute half the animal off the ration.
Let me proceed with my general argument. Some say, "If this can end only with rationing and control, why not do it now?" The butchers have been asking it. For example, Mr. Payne, of Clacton, has said, as published in the "Daily Express," that meat should be off the ration now. A meat trade representative, speaking to the same newspaper said:
Probably the best course would be to deration.
I notice that the President of Manchester Butchers' Association does not hold that view.
There are two real difficulties. The first is that we cannot yet be satisfied, nor is there any evidence to suggest to us, that there will be enough meat to permit derationing in the first six months of next year. I will not weary the House with what hon. Members know so well, that in the second six months of each year our grass-fed beasts go to slaughter. They know full well the comparison between the first six months and the second six months. My right hon. and gallant Friend is not prepared, unless he has evidence that there is an adequacy of meat, to undo the whole rationing system during a temporary period of adequacy, knowing of the probability that the next six months will not be one of such adequacy as to permit derationing.
We want to deration. My right hon. and gallant Friend has given many tokens of his determination to decontrol and deration wherever possible, but he is not going to do it unless he is fully satisfied that there is a sufficiency of meat throughout the whole year. Secondly—and this is a matter of profound importance to the whole House—everyone knows that the task that confronts the Government now is to devise a new system to satisfy the guarantees laid down in the Agriculture Act, 1947, and yet to provide a freedom which is consistent with those guarantees. That is a task of great complexity. Let no one who has


any regard for the commitments which both parties have entered into in respect of the agricultural community, loosely cry "Deration now," because it can only be done by disregarding all those pledges. What is more, the butchers themselves have asked for nine months' notice of derationing and decontrol.
Let it be repeated that it is our objective to meet and solve these problems, and to bring bulk purchase, control and rationing to an end, and that we shall do it at the earliest possible moment.

Mr. Willey: We should get this clear. Is the hon. Gentleman saying that it is the intention of the present Government somehow or other to terminate their long-term bulk purchase contracts and agreements not only with Australia but with New Zealand?

Dr. Hill: I am telling the hon. Gentleman that it is our determination to bring bulk purchase, control, and rationing to an end at the earliest possible moment. I have used unambiguous words, and I repeat them for the sake of the hon. Gentleman. This is our difficulty, and let us face it. We are having to administer a system of rationing devised for scarcity during a temporary period of abundance. Our difficulty, despite all the theatrical expressions of the hon. Member for Salford, West, is one of abundance and we must bear it with fortitude.
Now I want to come to the question of ewe mutton. The hon. Member for West Ham, North (Mr. Lewis), with his customary forthright frankness, gave the answer. It was Socialist ewe mutton. Perhaps pregnancy meant something different to a sheep when they were in office. Ewe mutton has been described as uneatable, it has been consigned to various places of various temperatures, and we are told that it is completely unsaleable. Mind you, Mr. Deputy-Speaker, that is not everyone's opinion. Let me quote from a letter sent to an hon. Friend of mine today, and which he passed on to me, from a firm of high repute in London which has many branches. I shall, no doubt, be asked the name of the firm and there is no reason why I should not give it. It is David Greig.
The letter reads:
In our opinion, far too much fuss is being created by the butchers over this meat. The mutton is not as bad as all that, and the amount is not more than a good butcher can handle. I think the trouble has arisen because all butchers have had far too easy a time and competition is now creeping back, thank goodness. We ourselves have taken the mutton, and were pleased to do so, and whatever the rest of the trade decide to do we ourselves will not take part in any action which is likely to embarrass the Ministry of Food. Of course, another part of the explanation is the housewife and the trade are now heartily sick of rationing.
I will not pretend this is the best quality meat, because, it is not. At its worst, it is far from the best quality meat. But, to say that meat that is unfit is forced on the butchers is not true. The right hon. Member for Bradford, Central remembers the point in his day. There is an appeal by the butcher to the district meat agent and there is an appeal in the market. None of this is unfit for the ration, and much of it is excellent. The hon. Gentleman asked me whether I have had any. Yes, I deliberately had some last Friday.

Mr. Royle: Only once.

Dr. Hill: No. What has to be faced about this kind of meat is that it is more appropriate for the pot roast, for the Lancashire hot-pot, than it is for the week-end joint. One of the difficulties of these days of rationing and shortage is that inevitably people have come to think of their meat ration for use for the week-end roast. Let us get back to the days when some other forms of cheaper meat can be cooked over a longer time and which, with more art and skill, can be served for a mid-week meal. I made inquiries today and I find that ewe mutton is served upstairs in the Members' Dining Room, so that many hon. Members who are counterfeiting hostility over ewe mutton have tasted it time and time again.
There is a reduced demand for imported mutton, and one of the reasons is the campaign which has gone on over the past ten days. Of course, it sells less well now that a good supply of first-class meat is available—and that is the very crux of it; there is a growing supply of good meat available in the shops. There is a larger ration and, as a consequence, there is a falling demand for the cheaper meat of lower quality.
What is the remedy? I go some way with the hon. Member for Sunderland,


North; if the poor quality meats are not selling well, the remedy is to lower the price. The hon. Member thinks it is possible to lower the price by increasing the meat subsidy, but he knows that that is inconsistent with the policy which has been adopted by my right hon. Friend the Chancellor of the Exchequer. It comes about that such prices can, in fact, be lowered within the existing subsidy ceiling. At a time when we are hoping to work towards decontrol, and bearing in mind that a precursor of decontrol is the removal of consumer subsidy, it would be fantastic if we chose this moment to raise the subsidy.

Mr. Jack Jones: Mr. Jack Jonesrose—

Dr. Hill: I cannot give way. I am going on with the point I am making. I want to announce certain price changes which are being made.
For some weeks we have been working on what the hon. Member for Sunderland, North will agree, I know, is the difficult task of altering the price schedule, and my right hon. and gallant Friend has now reached certain conclusions about what is possible. I will not give the full schedule details, which will be published tomorrow, but, as from 19th July, there is to be a reduction of 3d. a lb. for imported mutton and second quality home-killed mutton. When we bear in mind that the present price range is from 10d. to 2s., this means an average reduction of 20 per cent. in the price of imported mutton, and the new range will be between 7d. and 1s. 9d. For the summer months, the price of all qualities of pork will fall by 4d. a lb.
The compensating increases will be made in the price of first quality home-killed and chilled beef—not in the other qualities. The corresponding increase will be an average of 1¼d. a lb. Details of the distribution of the increases will be evident from the schedule published tomorrow. We believe that that is the commonsense way of dealing with the situation created by the abundance of meat.
I turn next to fat allowances. A great deal has been said on this subject. I notice that on 2nd July the London Meat Traders' Federation said that three things

had upset the butchers. One was withdrawing the right to refuse imported mutton. I have dealt with that. Secondly, that the allowance given to butchers who trim the fat from over-fat meat is stopped and, thirdly, that the regrading panels are abolished.
The second statement is not true. What has happened in the case of fat pork is this. Whereas, in the past, there has been an ad hoc examination and often wrangling over the allowance to be made on each animal, the general principle which has now been adopted is that for animals over 140 lbs. there will be a reduction in the wholesale price, that reduction rising with rising weight. A different system has been adopted, costing the Ministry more, and thus amounting to an increased fat allowance for the butchers, although the method is different.
The third statement—that regrading panels have been abolished—is not true. Regrading panels are in existence today, although they do not now have to participate in wrangles about individual animals and carcases of pork, because they are covered by a simpler scheme which pays the butchers just as well.

Mr. Royle: A very important point is involved here. Is it not a fact that the retailers have no representation on the regrading panels, and that the only people on them are employed by the Ministry?

Dr. Hill: That is true. They are experts on meat, appointed by the Ministry for the purpose. One of them is, in all cases, a butcher. The wrangles that have gone on in the case of individual animals have been bad enough, without putting the retail butchers in the invidious position of being on both sides of the fence for this purpose.
The amount of the mutton fat allowance is now ½d. instead of ¼d. a lb., and it applies not to a weight of 80 lb. but to 72 lb. A new instruction has been issued about the trimming of fat beef before allocation. In other words, we are doing our utmost to make it easier for the butchers to sell their meat. The hon. Member for Sunderland, North was very fair. He made reference to something in this offending circular which the butchers have not mentioned—the fact that surcharge has now disappeared, and that it is worth while to serve more meat.
I want to refer to the position in Blackburn, which has concerned some hon. Members. What happened was that 60 pigs, of 120 lb. weight each, were rejected. They amounted to 4 per cent. of the allocation. Being of an average weight of 120 lb. each—an ideal weight—they fell below the 140 lb., so no fat allowance was made. I hope that nothing will be said to exacerbate the difficulty there. I hope that calmer counsels will prevail and that it will be realised that the fat allowance system which has been applied is a reasonable one.
The fourth point, which is more intimately related to this Order, is that the butchers object to the new arrangements under which excess meat can be sold to any customer, registered or unregistered. That was their strong point of protest to us. They object to this new freedom. They want to continue the old arrangement. They are a little frightened of the freedom, and say that unless the present registration system is kept intact malpractices will creep into the trade. I am using their own words.
My answer is that whenever, in the past, a temporary excess of a particular commodity has enabled it to be sold off the ration, it has been the custom of the party opposite to permit that excess to be sold to unregistered as well as to registered customers. They tried to limit it to registered customers in the case of eggs, for a few weeks, and the system broke down. It was intrinsically wrong.
My next point is more important. We know that this action will result in housewives going from shop to shop, and the butcher will no longer be able to distribute his meat with the old certainty and authority; we know that shopping will begin again, and we want these things to happen. I do not blame the butchers. I understand their reluctance, after so many years of control, to accept a change which puts the housewives in a stronger position—such a fear of freedom is not confined to butchers—but we want the breath of competitive freedom to return once more.
The argument has been used that the butcher will be unable to determine how much meat he has to sell off the ration, because he is only permitted to sell it off the ration after he has satisfied his own customers. I believe that to be a theoretical difficulty. His registered customers

are his best customers. He tells us that he wants to serve only his registered customers and not other persons. We believe that the sensible butcher will see that his registered customers get their proper ration. Registered customers who do not get their proper ration, who find that it has been sold elsewhere, can switch their registration and go elsewhere.
We shall watch this position. Our present impression, however, is that the business judgment of the butcher will enable him to judge what he has available to sell off the ration after satisfying the needs of his regular customers.

Mr. Willey: Mr. Willeyrose—

Dr. Hill: I am sorry; I must hasten to finish.
The "Meat Trades Journal" last week had something to say about these changes, and I think I should quote what it said:
Taken by and large, these are genuine efforts on the part of the Government to overcome the difficulties inherent under control in time of peace and should be some help, even though they do not get right to the heart of the matter … Under control you cannot possibly have flexible conditions; that being so, these latest efforts of the Ministry should be welcomed for what they are—signs of a genuine desire to help—even though the benefit may be comparatively small.
That is the official organ of the trade, writing on Thursday last.
We are in a difficulty created not by scarcity, but by abundance. Whether we like it or not, we have to continue with rationing for a while longer, for the reasons I have given. We need the good will of butchers. We ask them to believe that the fair shares system of distribution is an essential part of the present arrangements. We ask them to accept that the ultimatum, so-called, was no more than a resumption of a practice which has applied almost throughout. We do not like it, but we have no choice. We hope soon to secure that greater abundance which is the only solution and which will lead to the disappearance of this whole and burdensome system of bulk purchase, control and rationing.

Mr. C. N. Thornton-Kemsley: Can my hon. Friend answer this point? If these arrangements are not to be brought into force until


19th July, why has there to be this seemingly long delay in introducing the price differential?

Dr. Hill: My hon. Friend, who is familiar with the schedule, will know that copies have to be printed for display in every butcher's shop. There is an immense amount of work to be done. We shall do it in the shortest possible time. If it is any consolation to my hon. Friend, we shall do our best not to embarrass the trade. We shall not issue, for example, imported mutton for next week. We shall keep the issue of pork down to the minimum consistent with safety. We shall do our best to smooth the path, but we cannot get through all the printing and administrative steps to enable the reduction to take place before Sunday week.

12.49 a.m.

Mr. Jack Jones: We have listened, as usual, to a very forthright, able and glib speech which has been made in an effort to cover up what I consider to be one of the scandals of the age. The Parliamentary Secretary has told the House that it is the intention of the Ministry to finish with bulk purchase at the earliest possible moment. That statement comes within a very few months of the signing by the Minister, I understand, of a 15 years' bulk purchase agreement with Australia.

Dr. Hill: Dr. Hillrose—

Mr. Jones: I wanted to intervene during the Parliamentary Secretary's speech, but he would not allow me to do so. The same courtesy, therefore, can be extended to him. The hon. Gentleman can sit down and listen, as I had to do.
It is not the amount of meat that we are worrying about, but the quality of it which is being foisted on the people, particularly that section who can afford to buy only the cheapest cuts, and who, in many cases, cannot afford to take their ration at all. In Manchester last week and the week before meat was being given away by butchers. Many people rushed from the surrounding districts to get some of this gift meat, but when they tried to cook it they were so disgusted with the quality that some of them asked for their bus fares back. I can

produce photographs of butchers' shops in Manchester where mutton chops were sold at a penny a chop.
The position has been reached where the butcher is compelled to take with a reasonable amount of good quality meat other meat which has already served a very useful purpose. I want to defend the poor ewe. It served a purpose in the last five years. It has been shorn four times in that wild scramble in Australia when wool prices went up 1800 per cent., and workpeople in this country had to pay unreasonable prices for cloth and suits. These beasts have now been slaughtered and it is about that type of meat that the complaints have been made. Am I being told by the Parliamentary Secretary that in these meat agreements there was no specification of the kind of meat to be received at the agreed price?

Mr. A. C. Manuel: Can the hon. Gentleman say how many lambs have been produced by the ewes during these extra four years of life?

Mr. Jones: I suppose that if they are allowed to run wild nature takes her course, and probably each ewe would have three lambs. But we are not getting the lambs. It would not be so bad if we were. We are getting nothing like the same percentage of New Zealand lamb that we used to get. Instead, there is this high percentage of bad and unpalatable ewe mutton.
I defy anyone in the House, unless he is a bachelor and a vegetarian, to say truthfully that he is not spending more than he is legitimately entitled to on the meat ration. The reason for that is because the poorer sections of the community are no longer able to take up the ration at present prices. There is great force in the argument of my hon. Friend the Member for Sunderland, North that the wage earners have to wait until Thursdays and Fridays for their meat, against Mrs. Hill living at the top of the hill who can, with her cheque book, buy on Mondays, Tuesdays, Wednesdays. Thursdays and Fridays. It is a fact that those who have the most money can today get the best cuts of meat and I defy contradiction on that statement.
I have great respect for the personality of the Parliamentary Secretary, but I


challenge him to go into any strange city tomorrow or any day next week and unobtrusively watch what is going on. If he does he will see what meat is in the baskets of the wives of the workers and in the baskets of those who can afford the best. We are now returning to the old days—the so-called good old days—when the scrag end of meat went to the poorer people and the sirloins and the rich meats went to the wealthy, the people with the cheque books, who do their buying by telephone. That is the state of affairs which we deplore. That is what the Tory Government want, and it is the poorer people who are at a disadvantage.

12.58 a.m.

Mrs. Barbara Castle: Both the butchers and the housewives would have been very much shocked at the frivolity hon. Gentlemen opposite displayed while my hon. Friend the Member for Sunderland, North (Mr. Willey) and my hon. Friend the Member for Salford, West (Mr. Royle) were presenting the case against this Order to the House. It was frivolity which contrasted sharply with the serious way in which they talked about the food situation at the last Election, and was in marked contrast to the vicious attacks which they used to make on Labour Ministers of Food for far less crimes than the Ministry has been displaying in the last few weeks. Indeed, if, in the days of the Labour Government, there had been such an administrative muddle and breakdown in meat supplies as has been the case in the past few weeks and is still likely until 19th July, then there would have been an enormous outcry in this House and in the Press by the Tory Party.

Mr. Lewis: Is my hon. Friend suggesting that members of the now defunct Housewives' League, in their mink coats, would have been turning up at the House in their Rolls-Royce cars to burn their ration books?

Mrs. Castle: I am suggesting that the Housewives' League would have been roasting ewe mutton on the doorstep of the Ministry of Food if this had taken place under a Labour Government. I am wondering whether all the members of the Housewives' League have emigrated to Australia.
This frivolity of hon. Members opposite was in rather marked contrast to the solemnity of the Parliamentary Secretary when he lectured us about arguments that we had never put forward from this side of the House: about how impossible it would be to restore the right of butchers to reject meat; about how undesirable it would be to deration meat now. But that is not the burden of our argument here. Our argument is the simple one that the trouble we are in now is not due to the fact that there is an absolute abundance of meat, as the Parliamentary Secretary tried to pretend, but that there is merely an abundance at present prices.
There is over-supply at present prices not because we in this country are suddenly eating a great deal more meat than we did before the war, not because there is now such a choice that we have reached saturation point in demand. The Parliamentary Secretary knows perfectly well that in 1950, which was the best post-war year for the consumption of fresh and frozen meat, we were still only consuming per head per annum 75·5 lbs. compared with 91·4 lbs. in the pre-war years 1934–1938. As my hon. Friend the Member for Sunderland, North showed in the figures he quoted tonight, we have not yet this year got back to the 1950 figure.

Dr. Hill: In fairness, the hon. Lady should make it clear that it is estimated that this year there will be the largest supply of meat available in any post-war year.

Mr. Willey: Will the hon. Gentleman agree that the difference estimated by him is within 1 per cent.—this is an optimistic estimate—1 per cent. according to the Ministry's publications of the 1950 actual figure?

Dr. Hill: I shall not attempt the mental arithmetic here and now, but I can tell the hon. Member that the supply this year on the new estimates, bearing in mind the further expected supplies from Australia, will be substantially in excess of the usual level since the war and in absolute excess of the best post-war year.

Mrs. Castle: But it could be substantially in excess of the usual level of post-war years and only slightly in excess of 1950, because we know that 1950 was an exceptionally good year. From the


reply of the Parliamentary Secretary it is clear that the difference this year will not be great compared with 1950 but in 1950 consumption was only 75 lbs. per head compared with 91 lbs. in 1934 to 1938. When we are told that we now have abundance we get a wonderful revelation of Conservative food policy. It is the picture of the Conservative food policy which we always said to the electors it was the intention of this Government to introduce. What is abundance under this Government? Abundance is not an improvement on the pre-war situation. No, Tory abundance is merely that on a lower figure of supplies than pre-war they will so manipulate food prices that we cannot sell what we have. That is what has been happening. We have over-supply at the moment not because people are eating as much meat as they want, but because they are eating as much as they can afford to eat.
The reason is that all along the line there has been an increase in food prices, not only meat prices but of all the alternatives to meat. If the housewife wants a little fish or eggs or anything else she finds it all mounts up to a food bill which makes it totally impossible for the housewife to afford the meat available, even to afford the consumption she enjoyed before the war.
Therefore, it is quite true that very soon we shall be able to look forward to the prospect of derationing meat. This is an unfolding, very nicely, of the conspiracy against the housewife by the Parliamentary Secretary to the Ministry. It is unfolding absolutely according to the predictions in the last Election of those on this side of the House. The scheme is so beautifully worked out. First the Ministry, by foisting on the housewife at a price level she cannot afford, and in excess of the value of the meat, an inferior quality of meat, creates this breakdown in distribution, the sort of breakdown we have in Blackburn this week. The reply of the Parliamentary Secretary on the situation in Blackburn is totally unsatisfactory. When the fat pork was delivered in Blackburn the butchers refused it on the advice of experts appointed by the Ministry itself to allocate meat to the butchers.
I am quoting from the "Daily Express", not a Socialist paper—[An HON. MEMBER: "Not yet."] It will be when

it sees the anti-Empire policy of the Parliamentary Secretary, as he abandons guaranteed prices for meat to Australia and New Zealand.

Dr. Hill: The hon. Lady really must study the agreement which we have with Australia and New Zealand before she suggests that there is any intention of breaking arrangements which have been honourably entered into. Those agreements provide for the return, after consultation and at the appropriate time, to private trade.

Mrs. Castle: That is all very well, but the hon. Gentleman cannot have it both ways. If he is keeping a pledge with the Commonwealth for the acceptance of the whole exportable surplus of meat which the Commonwealth can send, and for a guarantee of minimum prices, then he will not be in the position of freedom from bulk purchase he said he hoped to be. Either he is not going to solve this meat problem which he says is created by bulk purchase and long-term contracts, or he is abandoning the policy of Commonwealth support.
But let me return to this "Daily Express" statement. According to that, it was the experts appointed to allocate the meat to the butchers who rejected the fat pork. I understand that these experts are the agents of the Ministry; and this was not an unreasonable attitude on the part of the butchers because, according to the "Daily Express," the experts said, "What is the use of taking it when the housewives will not buy it?" The Parliamentary Secretary does not deny that, as a result of the action by the experts from his own Ministry, he then took away the whole meat ration for Blackburn for a week, nor that it is now stored in a mysterious place, nobody knows quite where.
It is not good enough for the housewives of Blackburn to be sacrificed to the administrative inefficiency of the Parliamentary Secretary and his right hon. and gallant Friend; and yet all that he tells us now is that he will solve the mess by some new price arrangement which is to operate on 19th July. Are we to have meatless days in Blackburn until 19th July?
I say quite solemnly and frankly that the Ministry of Food has deliberately created a situation in which it can foster


a public demand for the end of rationing; an atmosphere in which it will seem that that demand will come from the housewives, encouraged by the butchers and the trade. Of course, if we are told that this trouble is all caused by an abundance of meat, if we are told that there is plenty of meat, the housewife says, "O.K., why cannot we have an end of rationing?" But the truth is that the abundance, if there is abundance, is because prices have been kept at an artificially high level; a situation created by the Minister first by reducing the subsidy and so sending up the price of meat generally to a new high level; and, secondly, by selling the imported meat at such huge profits to offset what small subsidies still remain. By this combination of facts, the Minister has sent up prices of meat and so maintained the price of the inferior cuts, that we have arrived at a situation where we are artificially over-supplied with meat.
The way in which the Parliamentary Secretary would deal with this situation is just the way which we anticipated, because it is, without doubt, part of the pattern. The housewives having refused to accept inferior meat at inflated prices, along comes the Ministry and says, "Ah, yes, now we will meet this situation by cutting the price of the inferior meat."
They say, "We will cut the price of ewe mutton and of fat pork," which, incidentally, is something which the Ministry have been asked to do for many weeks now. It has taken a very long time and a few butchers' strikes to get them to do something which ought to have been done from the beginning. This grotesque profit on inferior imported meat ought never to have been allowed. They say, "We will cut the price of this old ewe mutton and this fat pork which we have been trying to sell at an excessive price all along the line."
But, having been driven to do that, they then say, "Of course, we are really paying for the subsidy on home meat out of this profit. Therefore, if we have to forgo our inflated profit, the subsidy will have to be increased if we are to maintain the price of home produced meat at its present level." So along comes the Parliamentary Secretary and refuses to discuss the meat situation on its merits, on the grounds of the nutrition of this country, or on the needs of the

housewives, of the children and of the hard working men and women.
After all, the hon. Gentleman is only the Parliamentary Secretary to the Ministry of Food. He is not concerned with nutrition under a Tory Government; he is concerned merely to be the creature of the Treasury. He tells us that the subsidy cannot be increased because it is contrary to the policy of the Chancellor of the Exchequer. But it is the duty of the Parliamentary Secretary to the Ministry of Food to fight the Chancellor on a matter which is undermining the consumption of good food by the people of this country.
The Parliamentary Secretary, the ex-"Radio Doctor," has forgotten the sort of cry he used to give us, "A little bit of what you fancy does you good." Instead, he has a new cry, "A little bit of what you fancy will cost you more." To compensate for this generous gesture of reducing his great profit on pork and ewe mutton he is going to increase the price of the decent home produced meat. Far from the housewives getting more red meat as a result of Conservative administration, they are getting less

Dr. Hill: The rich get it all.

Mr. Jack Jones: They get more than their share.

Mrs. Castle: My hon. Friend is quite right when he says that as a result of the steady rise in the price of meat under this Tory Government the best prime cuts of meat have become the exclusive monopoly of the wealthy people. But this is obviously only the beginning of the process, because when, through raising the price of high quality meat, the demand for it falls off, the next logical step is the total abolition of the subsidy on meat. [HON. MEMBERS: "Hear, hear."] Of course, because having made meat so costly at a time when we are eating less meat than before the war, the Minister can get rid of rationing altogether.
That is the pattern which is emerging from this whole sorry story. The Parliamentary Secretary is not concerned with administering the distribution of food efficiently. He does not believe that he ought to be in the Ministry at all, and in that we can all agree with him. He is not concerned with ensuring that the poor dupes who believed what he and


his colleagues told them about getting a little more of the nice things of life, really get them. That story is only half told and the pattern is only half unfolded. It will unfold along the lines of Conservative policy based on derationing not as the result of abundance but of artificially created shortage. This will come very shortly, and the figures will show.
We have heard it said that the right way to get these matters settled is not for the butchers to have to go on strike and to defy the Ministry, although the Ministry have such little faith in itself that we cannot be surprised if people defy it. The situation that has arisen in many towns like Blackburn is intolerable and ought never to have been allowed to rise, and the hon. Gentleman's proposals tonight will not solve it on a satisfactory basis.
When the weavers, engineers and other workers of Blackburn realise that this situation will be solved by telling them that ewe mutton and fat pork will be cheaper, that at the other end of the scale the good red beef of old England is beyond their reach because it should be the prerogative of the person with the deepest purse, and that that is the pattern of the story that the Parliamentary Secretary is telling Blackburn, then in due course Blackburn will give its answer.

1.18 a.m.

Mr. Ralph Assheton: I do not propose to detain the House for more than a minute or two. I listened with great care to everything that the hon. Lady the Member for Blackburn, East (Mrs. Castle) said, and I think I detected that she was more interested in seeking to attack the Parliamentary Secretary than to bring to the notice of the House the very serious position that exists today in Blackburn. I excuse her for that, because I know that she has had great difficulties to face and that the word "Abingdon" must be engraved upon her heart.

Mrs. Castle: Is the right hon. Gentleman trying to suggest that it is possible to deal in this House with the very serious situation which has arisen in Blackburn without attacking the Ministry of Food—or does the right hon. Gentleman think it is the fault of the butchers?

Mr. Assheton: I am just going to try to do that very thing.
When I woke up this morning I read in my newspapers that a very serious situation had developed in my constituency. What had happened this week was that a percentage of the meat sent to Blackburn was rejected by the butchers; that was pork. The Parliamentary Secretary has told us that it was only 4 per cent. of the meat allocated to Blackburn. In Blackburn, we do not like pork in July. Hon. Members may think that is silly, but in the North of England people do not like to eat pork unless there is an "r" in the month. It is an old prejudice and the Parliamentary Secretary may think it is very foolish, but, none the less, that is the case. The butchers are indignant when they are given a considerable allocation of rather fat pork in July, but the serious thing is that when they rejected the 4 per cent. they were told that the 96 per cent. of other meat would be taken away from them.
That is a very alarming situation to face. I was very glad to hear the Parliamentary Secretary say that the only solution to the difficulties is the complete ending of State purchase, controls, and food rationing. That is entirely a policy, with which I am in sympathy and for which I have pressed for a long time. I am only sorry that the Parliamentary Secretary was unable to tell us the date on which the Minister proposes to remove the meat ration altogether. I hope it will be much sooner than he thinks and I hope he will take some risk, if necessary, to remove it. I would rather do without meat for a week or two than to go on in this unsatisfactory situation.
What distressed me this morning was that I detected, after I read my newspapers, that my right hon. and gallant Friend the Minister of Food, and the Parliamentary Secretary, who is much respected in Blackburn, are at loggerheads with some of my constituents. I find it most awkward when some of my friends feel like this. I know the butchers of Blackburn are excellent men and that the Minister and the Parliamentary Secretary are excellent men, and I believe that there must have been some misunderstanding. I do not believe that the butchers in Blackburn fully understand the position and, after hearing the Parliamentary Secretary tonight, I feel more


certain of it still. Had the butchers of Blackburn had the opportunity of listening to him tonight and of conferring with him, this situation would not have arisen.
I have spoken to them on the telephone twice today, and there is great confusion. They do not understand the Minister's policy. They feel, quite honestly, that they have been roughly treated. I know the Minister and the Parliamentary Secretary are the last two people on the Front Bench to treat the butchers of Blackburn roughly. Therefore, I am convinced again that there has been a misunderstanding. I hope that the Minister and the Parliamentary Secretary will do what they can tomorrow to clear up this matter.
I daresay that whoever is negotiating on their behalf with the butchers, has not succeeded adequately in putting over the Government case. I daresay that the butchers have not been able to understand what has been told them. But one cannot let a town of 110,000 people go without meat because there is a difference of opinion and a difficulty between the Ministry in London and the butchers in Blackburn. The Parliamentary Secretary said that the only way to get over this difficulty was to get rid of State purchase, controls, and rationing. I hope, in the meantime, that he will smooth things over in Blackburn.

1.24 a.m.

Mr. James Hudson: The right hon. Member for Blackburn, West (Mr. Assheton), has given us an account of that old Lancashire theory of the supply of pork in the late spring and summer months which contain an "r." Unfortunately for the right hon. Gentleman, the policy of the Tory Party, as explained only last week with regard to the supply of pigs from the farms, will not have any reference to the months with an "r" or otherwise in them. When the farmer comes along with his pigs, asks for the guaranteed price, which the Tory Party in its promises at election times and in its statements in this House, has agreed to pay for the fat pig in any month of the year, the guaranteed price must be found.

Mr. Assheton: The pigs which arrived in Blackburn this week were frozen. They had not just been killed. They were not pigs sent in this week by the farmers to the market.

Mr. Hudson: Unfortunately, the right hon. Gentleman advanced a theory about the way pigs are dealt with in the summer months. I am telling him that according to the policy he has accepted, and it does not deal merely with frozen pigs, but with those the British farmer is now supplying for distribution as food up and down the country, the guaranteed price will have to be paid at any time.
That being so, the Minister of Food ought to be able to say what is to be the reaction on food policy of what the Government have promised to the farmers. The Parliamentary Secretary told us hardly anything about that point. He was driven to speak at length about bulk purchase and he dismissed that as entirely outside Tory policy, but he was unable to indicate what he is going to do about the 15-year agreement which is a counterpart of the policy adopted towards British farmers. It is a policy which is based and is understood to be based—

Mr. Speaker: The policy with regard to British farmers is a little wide of the Order.

Mr. Hudson: While you were out of the Chair, Mr. Speaker, the Parliamentary Secretary dealt at length—[HON. MEMBERS: "No."]—well, he dealt very clearly with the question to which I am trying to reply equally clearly. Of course, I shall bow to your Ruling, Sir. I am merely informing you that I have remained here all night and listened to the arguments, and the arguments are there if I am allowed to deal with them.
I shall pass very quickly from the point, but I want to say this in reply to the Parliamentary Secretary: the Government are not free to disregard their commitments about the supply from the Dominions and from British farmers. They talk glibly about scrapping rationing—that has been said while you have been out, Mr. Speaker—and also about the necessity to get rid of price control and the subsidies. Subsidies and the policy towards the British farmers are intertwined and we cannot get rid of the one without dealing with the other.
I submit that the Government tonight have been found out in a hopeless situation about pork and ewe mutton. [Interruption.] Hon. Members appear to have got back to their flippant attitude.


but that was not the attitude which they adopted when they were talking to the people about their great desire to provide them with good meat. They are not providing it. This is meat of a most unsatisfactory kind which does not conform to any good British standard, and if this standard of meat is allowed to continue it will break down the general policy of the Government both on food and on what they want to do for the British farmers and the Dominions.
When the Parliamentary Secretary began his speech he rather assumed that all of us on this side of the House were adopting the attitude which the butchers have adopted. My hon. Friend the Member for Salford, West (Mr. Royle) showed that he himself criticised the attitude of the butchers. The Co-operative movement—and I declare my interest as I am keenly concerned with the Co-operative movement—take the same attitude. They have announced this week that they realise that, under a system allocating meat to butchers, each must expect to take his share of good, bad and indifferent meat. What they say, and what I say now, is that the Government ought to have been prepared, at the time they announced their policy under this Order, to deal with the question of the reduction in price, instead of waiting until this late hour.
A fortnight is to pass before the altered price can become operative. The Minister tried to say that this was necessary because of all the printing that has to be done, and because the prices have to be put up in the butchers' premises, but he knew all about that at the time the Government brought in this Order, and if he had had any real understanding of the problem he must have known what would be the reaction. The Minister of Food ought to have foreseen this situation and not to have left it so that Blackburn will have to wait for a fortnight before it can be remedied.
The Government have to face the fact that the type of meat they now find it necessary to force on to the market is of such a character that they cannot expect to extract the prices they are trying to get from the butchers. There must be a reduction, and it must be made at once. When the Minister examines the total result of the policy he is pursuing I rather fancy that he will find it neces-

sary to make an even greater reduction in the price of some of the meat than that which he foreshadowed. I support the Motion which my hon. Friends have put before the House.

Mr. Willey: I think everyone will feel that this debate has served a very useful purpose. The Ministry has been thoroughly exposed, to the sullen discomfiture of hon. Gentlemen opposite. The Parliamentary Secretary did well on a very poor wicket, and I do not think that his right hon. and gallant Friend should have immediately deserted him. The Parliamentary Secretary has accepted our case, that in order to sell poor quality mutton the price must be reduced. He said two other things—

Mr. Speaker: The hon. Member is not entitled to make another speech.

Mr. Willey: I was merely indicating why I felt that, in the circumstances, we should withdraw this Motion. The other two factors mentioned were the question of the increased price of beef and the question of our long-term agreements with the Dominions. Both these matters are better dealt with on another occasion, and I therefore beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Orders of the Day — CENTRAL LONDON LINE (CONGESTION)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Redmayne.]

1.33 a.m.

Mr. Græme Finlay: At this hour I am very pleased to be able to turn from gastronomic difficulties to the problems of traffic in Central London and its eastern regional approaches. To put this problem of congestion in Central London quite shortly, I would say, first, that the Central London line used to terminate, at its eastern terminal, at Liverpool Street. It was not until the London Passenger Transport Board obtained powers, in 1936, to extend the line to Epping, and to make a loop line before Epping was reached, that there was any prospect of extending it for the benefit of the eastern environments of London.
There was so little foresight in the coordination between the London Passenger Transport Board and the local authorities concerned that the development took place without taking into account the great incursion of population into Essex, which has totally changed matters. The population of London has spread gradually into Essex. While in 1935 the total population of the districts of Wan-stead, Woodford, Ilford, Chigwell, Theydon, Epping and North Weald amounted to 209,596, by 1953 it had reached 315,880. The target figure under the Essex County Development Plan is 312,450.
It is abundantly clear, therefore, that the great increase of population has created entirely fresh traffic problems, which were not envisaged when the powers were taken in 1935 to extend the Central line. This, together with other minor factors, which I have not time to discuss tonight, has resulted in a tremendous congestion on that line. It is unnecessary for anyone familiar with travel on the Central line to have described to him at any length the conditions of congestion which obtain during the peak hours of travelling. Suffice it to say that between 8 and 9 o'clock in the morning, or between half-past 5 and a quarter to 6 in the evening, the congestion is extremely intense.
To put it in physical terms, scarcely an extra passenger could be crammed inside the coaches when they move off. When the doors open as another station is reached, the people on the fringes of the crowd inside the train have to be extremely agile not to be pushed out rapidly. There are many stories of people who have been so pushed out from inside the trains that they have slipped down the gap between the platform and the open door. Those are the sort of physical conditions which obtain. In terms of figures, the evening trains going eastward to Leytonstone carry about 350 standing passengers between 5.30 and 6.15. In the quarter-hour around 6 o'clock, there is a maximum of about 450 standing passengers. The same position applies roughly between 8.30 and 8.45 a.m., with about 350 standing passengers as the train comes from Leytonstone towards London.
The present Central line trains consist of seven coaches each with a seating capacity of 40. giving a complement of 280 seated passengers for the whole train. That contrasts unfavourably with the old steam train coaches, which carried 12 seated passengers to a compartment, or 980 seats for a seven-coach train. This raises the question of whether, when a line is extended so that it is no longer a purely urban line but goes well out into the environs of London and suburbia, the rolling stock is entirely suitable for its purpose. If one comes from Epping one has to make a journey of more than an hour before you reach London, and facilities as regards racks and luggage are non-existent.
I want to be as realistic as I can about overcrowding at peak hours. I know the Minister and the Parliamentary Secretary have to make the best of the economic resources at their disposal, and, while there are a number of long-term remedies which have been planned, I should like to confine myself specifically to the question of coaches. I hope that the Parliamentary Secretary will be able to say something about the possibilities of extending the facilities in that respect. At present about half the number of trains at the peak hours have eight coaches. The remainder have seven. If something could be done even to make up the other half to the same number of coaches, then the passengers who travel during the peak hours will be extremely grateful.
Of the longer-term schemes which were got out in 1949 by the London Working Party I would just mention route C, which envisaged a new tube from Tottenham and Edmonton, via Finsbury Park, to Victoria, with possible branch lines to Walthamstow, and route D, which envisaged the electrification of the Eastern Region, with suburban services to Chingford and Enfield Town. These are very expensive schemes which may take five or even 10 years to bring about, and I very much hope that the Parliamentary Secretary will be able to give us some good news about the extension of passenger coach facilities on these lines, because he would earn the undying gratitude of the passengers who have to use the service at congested hours.

1.43 a.m.

Sir Geoffrey Hutchinson: I am sure that any hon. Gentleman who travels on the Central line—and I appear to be the only one here now who does—or any of their constituents who do so, will be grateful to my hon. Friend the Member for Epping (Mr. Finlay) for having selected this topic. One must try to avoid using exaggerated language about the conditions which exist on this line, but it really would not be far from the truth to describe them as positively indecent. Passengers are pressed against one another. When trains stop and doors open they are ejected on to the platform. Before the train leaves again they make a rush and scramble back into the coaches. There are certain steps which might alleviate those conditions, and my hon. Friend has referred to one or two. I hope that the Parliamentary Secretary will be able to assure us that some steps will be taken in the direction which my hon. Friend has already indicated.
The real trouble in this matter lies in the fundamental errors made by the predecessors of the London Transport Executive in planning this railway. I remember being told that the Ilford Borough Council urged them to run trains direct from Stratford to Wanstead and to serve Leyton and Leytonstone on the Woodford line. The old L.P.T.B. rejected the proposal on the ground that they would not pick up sufficient traffic to make the line pay its way. The present conditions are one of the consequences of that.
Another cause of this trouble is the policy which has been followed so long of separating each major public service in London from every other public service and placing it under some independent authority which conducts its own affairs in its own way. A representative of the Passenger Transport Board told the South-West Essex Traffic Advisory Committee the other day, when he was asked to comment upon this matter, that the extensive building programme carried out by the L.C.C. was not envisaged when the line was contemplated in 1935. That illustrates the consequence of separating one of the major public services from other public services in London. We have I am afraid got a number of separate authorities with all the paraphernalia of machinery for bureaucratic administration. I hope tonight that the

Parliamentary Secretary will be able to assure us that some steps will be taken to relieve the situation that exists on this unfortunate railway.

1.46 a.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite): I am credibly informed that on the occasion of my seventh birthday I selected as my treat a journey from the Bank to Shepherds Bush, which was the extent of the Central London Railway then known as the "Twopenny Tube," due to the fact that that was the fare for any distance upon it. I come of a large family, all of whom had to conform to the wish of the member whose natal day it happened to be. Today I should not travel on that tube for pleasure, and certainly not for twopence. Much has happened since.
I would immediately support the views expressed by my hon. Friend that this is a grievous problem, causing the utmost discomfort to residents in their constituencies. I want to take this opportunity of trying to put the problem in its proper perspective. When I knew that my hon. Friend the Member for Epping (Mr. Finlay) was to raise this matter tonight I naturally made some inquiries from London Transport. They are not happy about the loadings on the Central line, but they supplied me with figures which show, however unpalatable this may be, that traffic conditions are in fact worse on other tube lines than this.
The loadings on the Central line east of Liverpool Street are easier than on several other sections of the system both as regards total passenger traffic carried during the peak periods and passengers carried in the quarter hours of maximum traffic density. At its worst, on the Central line east of Liverpool Street, there are carried some 6,000 passengers per quarter of an hour. It is a formidable figure but the Northern and District lines have to carry, for roughly comparable services, as many as 8,000 passengers during the same period of a quarter of an hour.
Perhaps I may here interpolate that although more agreeable methods of transport are offered to me in these days I make it my business to travel very frequently on the tubes in peak hours in order to see how bad the problem is.


In the works programme of 1935–40 North-East London happened to receive a lion's share of transport improvements. These included the extension of the Central line to Epping, the loop line to Hainault via Grange Hill and via Newbury Park and the electrification of the main line from Liverpool Street to Shenfield.
I have no doubt that my hon. Friends will have studied the Report of the Transport Commission for 1952—it is a voluminous but very interesting document—and in particular the observations on page 108 regarding this problem of the tube railways. They will find that London Transport are naturally alive to the importance of increasing the capacity on the Central line itself and have reconstructed the original portion—the Liverpool Street-Shepherds Bush sector—and built the stations on the extension so that eight-car trains can be taken.
As regards the length of trains and availability of coaches I find that last year 21 seven-car trains were lengthened by one car, making them into eight-car trains and making a total of 33 eight-car units out of a total of 79 on the line. It is hoped to lengthen a few more trains this year, but the extent to which the London Transport Executive can make progress with this programme depends on the rolling stock replacement on the Piccadilly line, where the congestion is even more serious. The programme for replacing the Piccadilly line rolling stock had to be deferred because of cuts in capital investment and the heavy increase in the price of cars which were proposed. Had this programme been carried out as planned, it would have set free rolling stock for lengthening the Central Line trains.
Looking to the future, as we must—I fear the distant future—examination of the London Plan Working Party's Report by the Ministries of Transport and Housing, and also, of course, by the Commission, has led to general agreement that the key to easing pressure on the underground railways lies in the building of a new cross-London tube from Walthamstow via King's Cross to Victoria, with an extension to South-West London. The Commission have asked that this tube should be accepted as the next major work to be undertaken in the London area, and this matter is still

under consideration by the various Ministers involved.
It is however generally agreed that the Northern suburbs have the greatest claim to some improvement of travelling facilities in the London area, and many suggestions have been considered, among them the electrification of the surface lines which serve Enfield and Chingford. The London Plan Report proposes the electrification of these lines to be operated by trains of the tube type in connection with a second new tube into the centre of London via Liverpool Street. Continuing study since the publication of that Report shows that progress is more likely to be made by a scheme for the operation of main line electric stock.
I would point out to both my hon. Friends, however, that the electrification of the Chingford and Ilford branches would not of itself provide a solution of the traffic problem in the North-Eastern sector, but might aggravate it. While it might enable services to be improved and would stimulate further traffic, the problem does not end there as it is necessary to consider the movement of increased traffic westwards from Liverpool Street to the centre of London. It would, in fact, add to the difficulties on the Central line.
As has been so well stressed by my hon. Friend, the Central line is already heavily overtaxed at the peak periods, and an improvement in the rail services entering Liverpool Street from the north and north-east would merely aggravate the position which the new tube via King's Cross and Victoria is designed to alleviate. But my hon. Friend has done well to bring this matter before us in view of its great importance to his constituents, whom he represents so energetically, and, indeed, to all those living in the north-eastern area on whose behalf he has boldly taken the initiative tonight.
I am bound to say, despite the hour, that it is a matter of some surprise to me that hon. Members opposite, who are intimately concerned with this matter from a constituency aspect, have not taken the trouble to be present. I find myself confronted with something of a vacuum. I would have thought they might have found it possible to be here but, in their absence, I would say that


this whole situation is merely another example of the grievous wounds inflicted upon our economy by two world wars and a burdensome rearmament programme. I can, however, give the assurance that the whole problem of improved conditions of rail travel in London, both surface and undergrounds, is kept under constant review by the British Transport Commission as a most urgent feature of their future construction programme.
It happens, quite fortuitously, that this matter has been raised on the day that my right hon. Friend the Minister

announced after Questions the names of those who are to conduct the inquiry into London's public transport system, and I have no doubt that my hon. Friend's remarks, together with the valuable addendum of my hon. and learned Friend the hon. Member for Ilford, North (Sir G. Hutchinson) will both be studied by that body in the course of its deliberations.

Adjourned accordingly at Two Minutes to Two o'Clock a.m.